National Westminster Bank has retreated from a decision to put all of its processing on servers running the Microsoft Windows NT operating system.

The move, first contemplated in 1993, would have transferred everything, including a data base of more than seven million customers, from International Business Machines Corp. mainframes to Windows NT systems, said Achi Racov, Natwest Group's chief information technology officer.

Under the direction of Mr. Racov, who became London-based Natwest's top technology officer three years ago, the $330 billion bank will now keep its IBM hardware and gradually modernize the operating systems, such as MVS and S/390, that run on it.

Natwest has also moved to standardize its data bases on IBM's DB2 system. "If you don't use DB2, you have to justify it," Mr. Racov said.

Natwest's decision comes as many institutions are weighing the savings and flexibility promised by Windows 2000-as the next advance in Windows NT has been named-versus the proven stability of mainframe systems.

Microsoft has been pitching NT as a replacement for mainframe systems for years. In May 1997 it went so far as to host a "Scalability Day" to allay fears about NT's limitations and demonstrate its ability to process billions of transactions at a time.

The operating system has made tremendous inroads at corporate desktops. Mentis Corp., a Gartner Group company, has said 42% of banks with more than $1 billion of deposits plan to use Windows 2000 as the primary operating system in personal computers in 1999, up from 13% in 1997.

Windows NT is also being more widely deployed on servers that oversee local operations, such as functions at a single branch. Fifty-five percent of banks with more than $1 billion of deposits expect to use the system by 2000 to drive branch servers, up from 18% that actually used it in 1997, said Mentis of Durham, N.C.

But Windows' ability to support mainframe-style, transaction-intensive applications is not proven.

"For commercial banking, I wouldn't think it would be remotely possible," said Larry Sikon, managing director for technology services at NationsBanc Montgomery Securities, San Francisco.

"Historically speaking, it has done well at the department level, but at the enterprise level it has had some issues," said Eric Meredith, manager of advanced technology at PNC Bank.

Mr. Racov said, "We took a bet on NT and it is not a match for MVS." Referring to a different IBM mainframe operating system, he added, "Nothing can match the reliability, availability, and recoverability of S/390."

Natwest's decision to stick with its existing mainframe computing architecture resulted from an extensive analysis. The bank rejected the option of installing new software packages as being too rigid. "You need great discipline to go with new packages," Mr. Racov said.

It also decided against doing a complete rewrite of its mainframe system, because it would have taken "10 to 15 years, provided we didn't move from where we are now."

Instead, Natwest is keeping some of its existing mainframe software, rewriting some and replacing some with newer software packages. Mr. Racov said the key is to accomplish all of these tasks "gradually and in small chunks."

For example, the bank broke 25,000 lines of code into five chunks, depending on whether they represented, for example, products, customers, or branches. When modifications are made, only 5,000 lines of code are affected, and "the risk of fault is local."

Systems reliability is becoming more important, Mr. Racov said. "The more we go to a personalized world, the less we can afford even the slightest hiccup."

He said Windows 2000's promise of lower costs is deceiving, because the S/390 cannot be replaced with a single NT system. "The moment you go to more than a single server, it will cost you more," he said. He added that multiple servers "are difficult to manage," while the S/390 lets the bank easily send commands and upgrades to the entire institution at once.

Natwest continues to use Windows extensively, mostly at end-user desktops. Windows also serves as the computing system within Natwest's ATMs, letting the bank customize its ATM screens.

"End-user computing, including ATMs, is on NT," Mr. Racov said. "But as we move forward, we can't ignore where we are. We need to leverage what we have, because it's good."

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