NEW ORLEANS -- U.S. Bancorp will become the first to run the Strategic Banking System, a major integrated software package, on computers from a manufacturer other than International Business Machines Corp.
The Portland, Ore.. banking company has opted to use Tandem computers for the retail software, which is the product of a joint development effort by EDS Corp., Banc One Corp., and Norwest Corp.
The decision is part of a major overhaul of retail systems at U.S. Bancorp. It is designed to deliver updated snapshots of customer relationships, risk levels, and profitability, which would help in the cross-selling of products and in the general management of consumer banking.
Tandem Computers Inc. announced the U.S. Bancorp contract, without disclosing financial terms, at the American Bankers Association's national operations and automation conference.
Desires Inroads in Retail
It is Tandem's first major contract with a U.S.-based bank for retail operations, a market in which the computer company would like to expand.
The computers from Cupertino, Calif.-based Tandem, called fault-tolerant because they have built-in backup capability if a processor fails, are not common in retail operations.
They are widely used in niches that require quick, reliable processing, such as automated teller machines and wire transfers. U.S. Bancorp relies on Tandem systems in its ATM network.
Tim Meier, senior vice president of information services at U.S. Bancorp, said that by using Tandem, the bank will be able to give customers up-to-the-minute information about accounts, and otherwise enhance its services.
When a customer arranges to make a bill payment at an ATM, for example, the bank could flash a message that the account will be debited that evening via the automated clearing house.
"The customer can decide whether he also still wants to take out $200," said Michael J. Hall, U.S. marketing manager for banking at Tandem.
Developed for IBM Mainframes
EDS and its superregional partners developed the Strategic Banking System for IBM mainframes.
U.S. Bancorp is the first from outside the development group to purchase the software, which has taken seven years and more than $100 million to develop. The comprehensive software project is still unfinished -- with a module to integrate loan information still under development.
Banc One has installed the customer information system but has deployed the deposit module in only a small number of branches.
The software is designed to collect information from multiple systems across the bank and combine data on all the customer's account relationships with personal financial details. The resulting data base serves as a central source for marketing and profitability, both per customer and per product.
U.S. Bancorp expects to have the Strategic Banking System customer information file installed in September, and the deposit module in the fourth quarter of 1993 or first quarter of 1994.
In internal tests running on different computer systems, EDS said it found Tandem had a 35% price and performance advantage over IBM mainframes when running large volumes of transactions. When running few transactions, the Tandem hardware had a 70% price and performance edge.
U.S. Bancorp will be able to add capacity on the Tandem system relatively easily, without rewriting software, simply by adding processors.
The bank will be able to process data on a 24-hour, continuous basis. Currently, most banks batch transaction data together for processing overnight. Because the Tandem systems have multiple processors that can work simultaneously, U.S. Bancorp will be able to process many small batches around the clock.
U.S. Bancorp will use a distributed data base that will enable it to update accounts as credits and debits are received anywhere in its system.
EDS said it will continue to market the software system on IBM hardware, or on any hardware a customer desires.