Meridian Has Stopgap Fix For Delay in IBM Software
Seeking immediate aid for its lending officers, Meridian Bancorp has decided not to wait for a tardy decision-support system from IBM and will initially install a part of the software.
Meridian Bank has been testing Officer's Workbench from IBM, a microcomputer-based system giving corporate loan officers a variety of software modules to improve and speed up decision-making.
But International Business Machines Corp. is months behind schedule in delivering the much-watched system, on which it has been working for two years.
IBM now expects to deliver the system in the first quarter of 1992, according to sources familiar with the project.
Rather than wait for the full system, Meridian plans to install in November a commercially available software package that tracks customer and loan profitability.
The software, called Crisp, from Micro/Resources Inc., is also a key component of Officer's Workbench. Also included in the IBM system will be software for loan origination and financial analysis.
Meridian is still expected to buy the multimillion-dollar IBM system. But the Crisp installation may hedge its bets against further delays.
IBM's Officer's Workbench is one of several major programming efforts underway at banks and computer companies to build a system for lenders. In the past, lenders at most banks did not benefit from automation, whether as an aid to analyzing borrowers or to pricing loans to reach profitability goals.
With loan losses running high, the need for a standard approach to and criteria for granting loans appears critical to executives. Banks believe they can improve their financial performance by giving lenders software that would automate collection and analysis of loan information, among other tasks.
Meridian executives would not comment on their change in plans, though Micro/Resources, Corte Madera, Calif., confirmed the November installation.
In anticipation of Officer's Workbench, Meridian has been saving data for a year on customers, loans, and deposits. That information will be fed into the Crisp data base, where it can provide some historical perspective on overall loan profitability.
A possible reason to install Crisp software in November is to reprice multimillion-dollar loans that are due before year-end. The software is designed to offer alternatives in pricing - juggling fees, interest, and deposits so that bankers can make profitable loans.
Executives from IBM and Meridian have had heated discussions on Officer's Workbench, due to the delays and disagreements about some of its features.
Meridian has been working with IBM for a year to develop the system.
If Meridian backed away from Officers Workbench, which could carry a $5 million price tag, other banks might be reluctant to purchase it.