As most of the nation's financial institutions rush to install personal computers in their branches, some community banks are bucking the trend with their use of "dumb" terminals.

Though prices of personal computers have fallen dramatically over the last year, installing a local are network is still a fairly expensive proposition for a small bank when software integration and system support dollars are factored into the equation.

Add to that fact that the vast majority of banks are underutilizing the processing power of their PCs, and it becomes clear why some community bankers are content to wait a few years before making the PC plunge.

A Case of Overkill

"I really wish they made some cheaper, weaker versions of the PCs that are out there now," said Stephen M. Mazurek, senior vice president in operations at Bank of Lenawee, Adrian, Mich. "We don't have a real need for the kind of power PCs would bring us, so it doesn't make much sense to be buying them right now."

Instead of buying a fleet of new PCs, Bank of Lenawee upgraded its host software system and kept its old network of dumb terminals.

The new system, anchored by AS/400 software from Southern Data Systems, Roswell, Ga., cost only about $25,000 to install. A comparable PC-based network would cost about $75,000, according to Mr. Mazurek.

But with PC prices continuing to fall, the bank plans to reassess its position in three to five years, he added.

While this strategy runs counter to what most bankers are installing, Bank of Lenawee is clearly not alone in its wait-and-see approach.

While the American Banker's annual technology survey found that the number of personal computers at banking companies was growing by 19% each year, only 53% of platform stations are currently automated with the intelligent workstations.

However, by 1995, 91% of platform stations will feature PCs, the survey found.

"The PC is more urgently needed at the platform than any other area in the branch," said Greg Schmergel, a bank technology consultant at Ernst & Young. "But even at the present levels of installation, there are enormous reservoirs of unused [computer power]," he added.

Putting PC Power to Use

Despite the vast, untapped potential of PCs -- the American Banker technology survey estimates that U.S. banks use only 5% of their PCs' processing power -- most experts say that host-based platform systems will be virtually extinct by the year 2000.

The reason for this is clear: as banks become more familiar with the capabilities of PCs, it will make much more economic sense for them to install intelligent workstations, which can better perform tasks now done on minicomputers or mainframes.

Despite the push to PCs, its infiltration of the platform is not likely to be completed for a number of years, observers and bankers say.

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