IBM Investing More in Bank System

Bows to Meridian's Demand for More Features

Concerns over a planned software system for commercial lenders are forcing International Business Machines Corp. to devote more development money to the effort, software company executives close to the project said.

IBM is making the extra effort because Meridian Bank Corp., the bank testing the Officer's Workbench software and its most likely initial buyer, wants more features added, the sources said.

Rather than lose a customer that it has been working with for the past year, IBM executives flew to Reading, Pa., to assure Meridian they would meet the new demands for software customization.

A Problem of Credibility

If Meridian backed away from the project, whose cost has been estimated to be $5 million, other banks might steer clear. IBM has been working on Officer's Workbench for at least two years.

The system is intended to integrate numerous software packages, allowing a commercial lender to do everything from recording travel expenses to analyzing a credit, all on a personal computer.

Officer's Workbench is also designed to integrate mainframe computers and PCs, allowing a lender to easily get his hands on the appropriate software application.

Meridian has been the test bank for development of the software.

Uses Are Extensive

No commercially available software allows a lender to do as much from a PC. For commercial lending, Officer's Workbench represents a radical change in the way lenders work, giving wide-ranging software to workers that typically have never used a computer.

With the automation should come better management and profitability of commercial lending.

Two weeks ago, David Ballenger, a top executive in IBM's financial service division, flew up from Charlotte, N.C., to meet with Meridian's management, led by Ronald Mueller. IBM and Meridian would not comment on the discussions, but executives at software companies involved in the project confirmed the details of the meetings.

Mr. Mueller, a senior vice president in commercial credit, has been pushing IBM to customize more of the software and data bases for free, said the sources. On Mr. Mueller's side is the leverage of being IBM's test bank and most likely first customer.

Impasse Is Resolved

After a review of the development costs, the local IBM salesmen told Mr. Mueller that additional customization would squeeze out any profits, making the system worthless to IBM.

For a brief time, the bank and IBM were at a stalemate. Then Mr. Ballenger, manager of wholesale banking for IBM's financial services industries, decided the project was too important to IBM to be put off track. In his meeting with Mr. Mueller, he said IBM would work out the requests for customization.

According to an executive at one of the software companies, IBM has run into trouble in figuring out how to integrate software and in building a single data base that can support all the various software applications. The executive, who asked not to be named, said Mr. Ballinger gave his guarantee that IBM would deliver whatever it promised.

The project is not behind schedule, but it will be unless Meridian and IBM hammer out the final requirements soon, the software executives said.

Choice of Bank Questioned

One of those executives said that Officer's Workbench will be delivered on time, but that IBM's decision to work with Meridian Bank as the bank with which it tests the software may have been a mistake. The bank, with $12 billion in assets, has a reputation for being tight with its technology budget.

IBM is also talking about Officer's Workbench with PNC Financial Corp. Observers said the Pittsburgh banking company may have been a better first choice because of its track record with technology projects and its willingness to spend heavily for automation that aids management rather than just processing transactions.

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