When he was hired to oversee information technology upgrades at Crescent State Bank in Cary, N.C., more than a year ago, Michael Goodman was given orders to "take the bank from 1999 technology to 2008."

One way he's done that is by embracing technology that's more 1993.

At a few of Crescent's 15 branches last spring, Goodman revamped the front-office computing systems by replacing all desktop PCs with thin clients - end-user terminals that run applications stored on a remote server. Some old-school bank techies might blanch at this, as they recall their aversion to original thin-client offerings from the '90s that came with slow, clunky interfaces and expensive mainframes, but Goodman swears that new-generation thin clients - also called virtualized desktops - are far easier to set up and manage than they used to be.

Goodman has supplied his offices with terminals that effectively mimic a Windows-PC experience through a low-cost device with no internal central processing unit components. Connected to virtualized quad-core servers, these bare-bones gadgets are centrally managed by Goodman and his team, meaning fewer trips to fix PCs in satellite offices, faster network setups in new locations, and, most importantly, maintenance and energy savings that Goodman believes could top $400,000 over the next three years as his staff rolls out thin clients across the entire branch network. "I wanted not only to give users the same speeds they were accustomed to," says Goodman, "but take that support of PCs off of IT's shoulders."

Savings is just one reason why Crescent has joined a small but growing herd of banks and financial services companies taking second looks at thin-client technology.

Bob O'Donnell, a high-tech analyst at IDC, says that health care and financial services are among the major industries in which he's seeing firms make the move toward virtualized desktops. "It's back to the future," he says. IDC estimate that sales of thin-client systems will grow at a 20 percent clip in 2010, to over 1.2 million units, up from 959,000 last year.

Two California-based vendors, Hewlett-Packard and Wyse Technology, together dominate nearly 70 percent of the thin-computing market. Crescent is converting to a thin-client platform by using virtual desktop technology produced by a smaller player, Pano Logic, a three-year-old firm in Menlo Park, Calif., that has landed deals with about 30 financial services clients (and has Goldman Sachs as one of its investors).

Along with ease of use and costs, a biggest driver behind thin clients' renewal is security. Crescent and other Pano Logic clients, including McHenry Savings Bank in Illinois, are able to isolate all critical data on central servers away from vulnerable end points. The individual thin-client terminals can also be locked down so users can't download data to personal storage devices or install software that might introduce malware onto the network.

There are potential roadblocks for banks. The upfront costs of investing in new hardware can be steep. Employees may resist the added control over their PC usage. And banks may have to examine whether their disaster recovery plans can handle more centralized operations, especially if they have a large fleet of employees working on laptops. "These are desk-locked systems," says IDC's O'Donnell.

Still, O'Donnell says he expects more small banks to make the switch to thin-client technology as they learn more about the improved manageability and the long-term cost savings.

"As smaller organizations have heard more about thin clients," said O'Donnell, "they think, hey, 'it's not that bad."

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