Mergers Buoy Software To Link Differing Systems
The recent spate of bank mergers have increased interest in software to let disparate computer systems exchange information.
One of the greatest challenges in combining financial institutions is squeezing significant savings from their back-office operations. In the recent merger transactions by Fleet/Norstar Financial Corp. and BankAmerica Corp., for example, back-office consolidation will account for about half the savings expected from the merger.
Some analysts and consultants have doubted whether such numbers can be squeezed from areas banking functions as check and data processing.
But bankers maintain that the savings estimates are reasonable.
Reducing Expenditures
For a number of institutions, including Fleet/Norstar, which recently purchased the failed Bank of New England from the Federal Deposit Insurance Corp., saving money begins with curbing spending.
"Many cost reductions are a natural outgrowth of a merger - eliminating redundancies and so forth," said Michael R. Zucchini, chief technologist at Providence, R.I.-based Fleet/ Norstar.
However, he added, "there is also a significant amount of money to be saved through prudent investment."
Alternative to Upgrades
Buying software for transmission of data between various types of bank hardware may be one such investment, and a number of institutions are taking this route.
By installing such software, which is available from Scientific Software Inc., Atlanta, and other vendors, merging banks aim to avoid some costly hardware upgrades.
"A bank looking to cut costs doesn't want to spend a million dollars on hardware just so its offices can talk to each another," said Ron Rosenthal, director of marketing for Scientific Software.
The software package from Scientific Software, known as Network Express, costs $45,000 to $250,000 for computer operations of different sizes.
For Use in Transitions
Apart from mergers, several financial institutions have used the software to ease their migration to a new host computer.
Howard Savings Bank, upgrading its mainframe system from a Burroughs to an IBM 3090, needed assurance that its teller terminals could communicate with both the old and new systems during the several months of transition.
The $5 billion-asset savings bank in Newark, N.J., made the transition last year with no significant loss of performance on the teller line. Network Express currently acts as an interface between Howard Savings' ISC-Bunker Ramo teller terminals and its IBM mainframe.
