Microsoft Corp.'s Scalability Day, a flashy event highlighting the benefits of client/server and clustered computing, featured a surprising amount of information relevant to bankers.

Though heavy on talk of technical specifications and relatively light on showing specific applications for the financial industry, the day was an important one for those interested in finding alternatives and supplements to mainframe computing.

In his speech, Microsoft chairman Bill Gates summed up the business climate driving the May 20 event in New York.

"The PC model is improving at an enormous rate," he said. "It is now stronger than ever before and has scale and strength like no other."

One measure of that strength is the PC's ability to process large numbers of transactions reliably.

Using some of its newest Windows NT and data base software products, Microsoft demonstrated a PC-based system that could process 1.3 billion transactions a day-close to five times the number of calls handled daily by AT&T.

It also demonstrated how a group of PCs and servers could process a bank with 1.6 billion accounts and 160,000 automated teller machines.

One process that makes such feats possible is the clustering of computers to let them distribute tasks and use shared memory in the most efficient way.

Roel Pieper, chief executive officer of Tandem Computers Inc., said, "The concept of clustering is fundamental in the on-line world."

This is particularly true for the banking industry, which expects explosive growth in the number of electronic transactions in the coming years. The sources of such growth are ATMs, PC-based banking programs, and automated phone banking systems.

"Tandem starts at one end of the computer problem, and we started at the other end-at the PC end," said Mr. Gates. "Now those two have met, and we're bringing together the best of both worlds."

The advances in client/server and clustered computing can benefit all banks-even very large ones with ambitious on-line programs.

For example, one demonstration showed how a system running Microsoft's Internet Information Server product on a Hewlett-Packard NetServer LX could process 100 million transactions from a World Wide Web site.

However, Mike Dusche, financial services industry manager at Microsoft, said smaller banks may stand to gain the most from computing's rapid evolution.

"It became apparent to us that we could help the small banker have access to the same tools that the big banker has today," he said.

"We had to give the small banks core banking solutions that they could afford to have in-house and use as a competitive weapon."

Mr. Dusche noted that some of the most efficient community banks have moved from mainframe or midrange systems to client/server or clustered environments.

A potential success story: Capital City Savings in Alberta, Canada, which is implementing a client/server-based core processing system expected to save $3 million in operating expenses over the next five years, according to George Irwin, Capital City's assistant vice president of information technology.

Also, in Manchester, Connecticut, Richard Meduski, president of Savings Bank of Manchester, estimated the bank would save about $1 million by moving its core banking functions onto a Windows NT-based software package.

"Our advice to banks is to take a very good look at their cost structures going forward," Mr. Dusche said. "As they face the specter of consolidation, maintaining a prudent cost structure is going to be one of the best tools for maintaining independence."

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