On Oregon community bank has bought a computer system with sophisticated document-handling features that larger banks are struggling to adopt.

To speed the processing of loans in its mortgage unit, Western Bank of Coos Bay will use computers and software from American Telephone and Telegraph Co.'s NCR Corp. of Dayton, Ohio, and additional software from Intelus Corp. of Rockville, Md.

"My whole staff is jumping at the bit to get going with it," said Patty Rumbaugh, vice president of Western Bank's loan center.

4-Year Payback Seen

Western, a state-chartered bank with $600 million of assets, plans to install the half-million-dollar computer system by year-end. The system uses so-called document image management and "workflow" technology to shuttle paperwork between employees electronically.

The bank is hoping for a dramatic payoff from the computer system. It is supposed to cut 15 days off the 30 to 45 days the bank now takes to approve and fund a loan.

By making the 20 employees in the loan processing center more productive, and minimizing paper storage costs, the bank expects to save enough money to pay for the new computers in four years, Ms. Rumbaugh said.

The system will make the handling of mortgage applications almost totally electronic from beginning to end. For example, employees in the bank branch offices in 30 towns throughout Oregon will fax mortage applications to the processing center.

Step by Step

Instead of printing out on paper, the faxed applications will flow straight into the computer system, which will will automatically prepare requests for credit information and to verify employment

All paper correspondence will be scanned into optical disks, and will be arranged into so-called electronic file folders that employees can retrieve from any one of 16 NCR workstations hooked into a local area network.

No Paper Pileup

The system will automatically forward file folders to underwriters and other employees when the time comes for them to look at an application.

Productivity will be improved because applications and other papers will no longer sit on someone's desk, inaccessible to other employees, Ms. Rumbaugh said.

Banks throughout the country are interested in similar technology.

According to the 1993. American Banker/Ernst & Young technology survey, 47% of the consumer lending, 30% of the credit card and 29% of the mortgage departments in banks intend to install some type of document image management system.

But few have. Presently there are only 250 document image management computer systems in banks, although in three years bankers expect to be running 1,800 document image management computer systems.

But banks tend to be overoptimistic about their ability to get these systems up and running, said Greg Schmergel, vice president of Tower Group, a bank technology consulting firm in Dover, Mass., which actually conducted the technology survey.

Desires Versus Reality

In 1992, bankers expected to install several hundred document image management systems, but only got 50 up and running, he said. "There's a discrepancy between desires and reality."

But Mr. Schmergel added that it is often easier for smaller institutions such as Western Bank to install advanced computer systems than for larger institutions to do so.

The reason is that larger institutions have to build bigger, more complex systems.

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