IN ITS CAMPAIGN to improve branch efficiency, Republic New York Corp. needed a novel solution.

Republic's goals were simple. "We wanted to bring the same capabilities we had at our headquarters -- word processing, spreadsheets, electronic mail--to our branches, as well as enhance our teller and platform applications," said Nick Calabro, senior vice president charged with upgrading the bank's aging International Business Machines Corp. 3600/4700 teller equipment.

As it looked to standardize hardware to accomplish this, Mr. Calabro said, management realized its network of "dumb" terminals in branches was a dead end, but it also had reservations about the use of personal computers.

The issue, said Mr. Calabro, was "bang for the buck: Were we going to get it? The PCs solutions we examined were overkill. We weren't going to tap the capabilities of the machine. We also had philosophical problems with managing upgrades, adds, and changes to 1,000 PCs in 60 branches."

The fact that the bank's core applications resided on IBM, Digital, and Tandem computer systems complicated the situation further.

An "open" system was the answer, one that would allow computers from different manufacturers to work together. "Members of our management team attended an open-systems development course, and we all came back thinking: |This is what it's all about,'" Mr. Calabro said. "Our branch system needed to interface with all three [host] systems, and do it locally." An open-systems solution, using hardware, software, and communications protocols supported by multiple vendors, seemed to be the answer, he said.

As it turned out, "the right thing" was implementing a novel approach to branch automation architecture, one that delivers the functionality of a PC-based local area network at a cost comparable to a dumb terminal system driven by a mainframe. The bank plans to have the new package operating in all of its 60 branches by the middle of next year.

Mr. Calabro said the bank began to rethink its strategy after two large savings bank acquisitions--Williamsburg Savings Bank in 1987 and Manhattan Savings Bank in 1990--enlarged its retail banking base. "The acquisitions essentially left us with a commercial branch network, part of which still used manual systems, [as well as] a consumer branch network," he said. The typical branch, as benifits an urban bank, is also large, with over $100 million in deposits.

"The magic phrase is |open systems," said Bob Popadic, a consultant in the financial services practice of Arthur D. Little Inc. in Cambridge, Mass. "More and more, bankers at the branch level need access to information from various sources, some of which they may not have even identified yet."

In addition to accessing information from multiple computers, as is the case at Republic, Mr. Popadic said, the branch automation systems of the future must be able to access and use data obtained from outside sources, such as third-party processors and on-line information services. "That type of access is greatly facilitated in an open architecture."

For Republic, the first open-systems solution was proposed in 1990 by one of its branch automation suppliers, NSS Corp. of Bedford, N.H. NSS wanted to redesign its PC- and DOS-based branch automation software so it would operate on IBM's RS/6000 workstation that runs AIX, Big Blue's Unix variant. Unix has traditionally been the operating system of choice in an open-systems environment. Republic agreed to become a test site for the new product, called CT/6000.

The architecture developed for this application offered Republic several advantages. Although the RS/6000 was originally designed as a single-user workstation for engineering or academic applications, benchmark testing showed the system possessed enough horsepower to drive up to 35 teller and platform terminals. This was sufficient so a single RS/6000, with a price tag of roughly $10,000, could serve the typical Republic branch.

Mr. Calabro said the CT/6000 package also communicates easily with the bank's various core software applications. "In terms of the peripherals and software, we ar not single-vendor sourced."

To date, Republic has proceeded slowly, with the CT/6000 package installed in seven branches. Four of those branches were brought on-line over one weekend, when Republic converted branches acquired from the recently failed American Savings Bank.

"The very first steps we took were to streamline the look and feel of the system," said Mr. Calabro. "Our applications were primarily 3270-type back-office screens that we brought out to the branches. On the platform, those applications are now at the point where we can turn the monitor so the customer can check the information. It's much slicker, but there's not a lot of added functionality."

Later, cross-selling, sales tracking, and prospecting applications will be added to the system.

Unlike some other banks, though, Republic doesn't feel the need to bring the sales culture to all areas of the branch. "We are not going to give platform-type functionality to our tellers," Mr. Calabro said. "In our branches, which are very large, the primary job of the teller is to serve the customer and move the line." Teller training will be handled by an on-line module that is under development.

In the meantime, the CT/6000 system will provide the functionality Republic's management was looking for, along with some autonomy for branch managers.

Much of what Republic hopes to accomplish with the CT/6000 project won't be realized until all branches are on-line sometime in 1993. But while the goals initially set for the project were modest, it looks as though its choice of an alternative route to branch automation will deliver the desired bang for not too many bucks.

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