NationsBank Corp. and MCI Communications Corp. have signed a network management and consulting agreement - a first for the two companies - that will improve the capabilities of the bank's communications network.

Under the three-year, multimillion-dollar contract, MCI is providing a package of services called Knowledge to NationsBank. The company is managing the bank's 22-site, nationwide data network using frame relay, a type of transmission technology that is good at handling high-speed data over widearea networks. Frame relay can support such high-bandwidth applications as imaging, bulk file transfers, and electronic transaction processing.

Through the use of client-server technology, the new network delivers desktop automation applications, data base information, and financial and news information from outside news wires to the bank's Institutional Group, a division that provides corporate banking, finance, and marketing services to corporations with at least $100 million in sales.

Lower Costs Expected

According to NationsBank officials, the new network will provide lower cost and higher performance than the traditional mainframe environment and point-to-point telephone services the bank previously used.

NationsBank, with $164 billion of assets, is the first customer to purchase the Knowledge services, supported by MCI's newly formed professional-services organization.

The services are designed to take over the management of an organization's network, leaving the organization free to focus on its primary business.

Management Duties Shifted

This arrangement is unusual, since banks traditionally employ large telecommunications staffs to manage their own networks, said Joseph Murphy, MCI director of managed services in the professional services group.

NationsBank is no exception, but under the contract some management duties once handled by the bank's telecom staff have been taken over by MCI, enabling the bank to reduce expenses in this area, said Paul A. Stotts, senior vice president of the Charlotte, N.C.-based bank holding company. Some work that was done through contract personnel, for example, has been eliminated, he said, while telecommunications staff members have been reassigned to other groups within the bank.

Outsourcing the management of the network has provided other advantages, said NationsBank officials.

"We've [rid] ourselves of the financial management of investment in equipment that will become obsolete," said John A. Dubret, a NationsBank senior vice president. "We're leveraging off MCI's ability to keep us technologically current without a capital investment on our part."

The bank is also benefiting from a shorter application development cycle, said officials, enabling them to react quickly to new markets. The client-server environment, combined with the use of the latest computer programming languages, lets bank officials turn out new business applications in six months instead of two years.

Need for New Applications

"It's incumbent upon us to turn out new applications in that time frame or we're not keeping up with new markets," said Mr. Stotts.

The new network is also said to be faster and handle more data traffic. "We have provided the network with the kind of capacity to carry expanded personal computer-based applications and the kind of user growth we expect for the 1990s," said Mr. Stotts.

The bank began to shift to a client-server environment in 1990, primarily for basic desktop automation needs, such as word processing, electronic mail, and spreadsheet programs, said Mr. Dubret.

Today, the bank is "committed to building custom applications in the client-server environment as an integral part of our business," he said.

"It was a priority for us to provide a network infrastructure that is flexible for our evolving needs and expandable to keep up with our rapid growth," said Mr. Stotts.

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