American banks are about midway through a massive branch-system overhaul using networks of personal computers, according to recently published research.
But while many of the country's biggest banks already have installed PC networks, many others have only installed the hardware and have yet to link them together to work more efficiently, experts said.
After investing millions of dollars to place personal computers on the desks of branch personnel, many banks still face the task of connecting these computers in networks that will allow their employees to exchange information easily.
Untapped Potential
In 1992, a full 80% of the branch terminals shipped by vendors were personal computers, and only 20% were so-called dumb terminals, according to a survey of over 2,000 banks and thrifts by Mentis Corp., a bank research firm based in Salisbury, Md.
In fact, about half the terminals at teller and platform stations are now personal computers. But only one-quarter of the branches of U.S. branches actually use the full capacity of these computers, according to Mentis.
The remaining personal computers are linked to traditional branch automation systems, where the PCs request information from controllers in each branch. The controller in turn requests information from the host computer, and relays it back to the PC.
Bankers can access information from client-server environments, in which networks of personal computers exchange information via a server located in the branch more quickly and more flexibly than they can through controller-based systems.
"Now the hardware is in place," said James Moore, president of Mentis. "Now bank spending [on branch automation] is migrating from hardware to software."
According to Mentis' figures, branch automation continues to be the single biggest-ticket item in banks' planned capital expenditures for 1993.
Big Piece of the Pie
The more than 2,000 banks and thrifts surveyed said they planned capital expenditures in technology totaling $2.7 billion. of which $760 million would be spent on branch automation.
Only $262 million was ear-marked for automated teller machines, the next single biggest category of expense.
While capital expenditure on technology remains about the same as last year, Mentis found that operating budgets are growing at about 2% from 1993 to 1994, with total operations expenses going from $19.3 billion in 1992 to $21.2 billion in 1996.
Peoples Heritage Bank, a $2 billion-asset bank based in Portland, Maine, has installed about $1 million worth of personal computer hardware in each of its 53 branches.
Wait-and-See Attitude
Now, the bank says, it expects to wait about a year before deciding whether to take the next step toward installing networks.
Currently each branch has on average one PC, which runs retail software from NSS Corp., Bedford, N.H. But most tellers and platform personnel still work at terminals. All the devices are linked to branch controllers.
Now the bank is evaluating whether to invest $3 million more to move to networks of personal computers at all branch stations.
"We have to be conservative about our investments." said Mary Schnobrich, senior vice president and branch administrator of Peoples Heritage Bank.
Part of the evaluation process is determining what operating system to use, Ms. Schnobrich said. "With open systems just beginning to come into play, we can't see what will be best for us going forward."
