Michigan National Bank has obtained a license to use software for reducing corporate clients' paperwork in business-to-business transactions,

Michigan National, an $11 billion-asset institution based in Farmington Hills, Mich., licensed the software, called Vector Connexion, from Sterling Software, Dallas.

The electronic data interchange program will enable the bank to offer services ranging from complete automated-payment origination and receiving to the handling of invoice and remittance information in computerized formats.

Stemming the Flow

Electronic data interchange, or EDI, represents a way of cutting down on the paper flow between trading partners, as well as reducing the potential for error. According to Michael Gibbons, vice president at Sterling Software, EDI is emerging as the preferred method of exchanging data among corporations.

Mr. Gibbons estimated that over 30,000 companies now communicate with each other using electronic formats. Sterling Software's direction division specializes in such systems, software products, and related services for the item processing operations of medium to large financial institutions.

For the past 30 years, companies have focused on automating and improving the way they communicate internally," Mr. Gibbons said, "Now more attention is being paid to the way they deal with each other."

Experience with GM

Michigan National was first exposed to electronic data interchange through an effort started by General Motors Corp. in the mid-1980s. A number of General Motors vendors are Michigan National customers who needed to receive payment data electronically.

According to Douglas Lenehan, first vice president at Michigan National, this first experience with electronic interchange showed the bank what was possible in the area of electronic transmission between clients. "We believe now that EDI is the future," he said.

Vector Connexion is expected to be up and running at the bank by the first quarter of next year.

Charles Kight, Michigan National executive vice president, said Vector Connexion was part of a larger commitment that Michigan National has made in recent years to the deployment of innovative technologies, including being one of the first banks in the country to introduce check image statements.

The bank is also developing an advanced workstation for commercial lenders around Microsoft Corp.'s Windows operating system.

Vector Connexion is being used by 14 banks and is compatible with most existing automated-clearing-house, lock box, and money-transfer systems.

At Michigan National, Vector Connexion will be running on an IBM mainframe, but versions are also available for personal computers and fault-tolerant hardware from Stratus Computers Inc. The software costs from $55,000 to $175,000, depending on the hardware and options chosen.

Ms. Sullivan is a freelance writer based in New York.

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