Maryland National Bank plans to be the first financial institution to install a new soup-to-nuts commercial lending system from Microsoft Corp. and three bank-software partners, according to sources close to the project.

The personal computer-based software, slated for installation at the bank by early next year, is built around Microsoft's Windows system. Users can control a computer's basic functions by selecting graphic icons instead of typing computer codes.

Microsoft, in the wake of its widely publicized breach with International Business Machines Corp. over the direction of PC software, wants to encourage banks to embrace Windows rather than IBM's competing OS/2 operating system.

Alliances Formed

Last month, Microsoft announced an alliance -- with Andersen Consulting Co. and with two of IBM's former partners -- aimed at integrating commercial lending software using Windows. The alliance members, besides Andersen Consulting, are Micro Resources Inc., Corte Madera, Calif., and Michigan National Corp.'s BancA unit, Dallas.

Microsoft is expected to announce the time schedule for the rollout of its software, called Solutions for Commercial Banking, at a news conference scheduled for Wednesday.

The project is also intended to fill a void left by IBM when it pulled the plug early this year on its long-delayed Officer Workbench project.

IBM reportedly sank about $5 million into the project, which was to have been tested at Meridian Bancorp, Reading, Pa.

Despite the new foray by Microsoft, many banks have already started to build their own integrated commercial lending systems using OS/2, tying together existing products such as BancA's Power1 and Micro Resources' Crisp packages.

Valley National, Phoenix, is one of those banks. The Valley National Corp. unit bought Power1, then developed its own customer relationship file, integrated statements, and links to an imaging system. The system runs under OS/2.

"We've created a totally paperless commercial lending system," said Bill K. Campbell, vice president of credit training for Valley National.

In the initial rollout at the Maryland National, a unit of MNC Financial Corp., 250 lending officers will be using the software, the sources said. Users will be able to use a single command to access both the Power1 and Crisp software.

Microsoft said it has been working for the past several months with Andersen Consulting to use Visual Basic, a Microsoft programming tool, to tie Power1, Crisp, Microsoft's Excel spreadsheet, and Microsoft Word together under Windows.

"Instead of looking at a bunch of different applications, when a commercial lender looks at screen, he will see the loan process flow," an Andersen official said.

The system's cost varies with size of installation, but it will probably range in the hundreds of dollars per workstation, sources said.

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