MEDIA WATCH: ASSESSING SYSTEMS' M&A ROLE

What role is technology playing in the consolidation sweeping the banking industry this year?

The answer varies, depending on what you pick up at the newsstand. The need to get big enough to afford systems has been cited in some news reports as a driving force, and virtually ignored in others.

A Business Week story on July 31, for example, said the deals are "above all designed ... to make possible the capital investments banks must make to be major players in today's financial world." The report added that "increasingly, technology is driving the wave of consolidation."

In contrast, a front-page New York Times story three weeks later emphasized competition from nonbanks and the need to cut costs as the key factors. Technology got just two brief mentions.

No doubt technology's impact on consolidation lies somewhere in the middle. While bankers involved in deals, such as the one between Chase and Chemical, have cited needed economies of scale in technology, others note that outsourcing opportunities and falling technology costs make systems generally affordable.

"If you look at what's happening to the cost of technology, it's plummeting. And the capabilities are skyrocketing," observed Christopher Jennings, chief executive of Dauphin Deposit Corp. in Harrisburg, Pa.

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