Academic journal article ABA Banking Journal

Automation in 1991: An Outlook

Academic journal article ABA Banking Journal

Automation in 1991: An Outlook

Article excerpt

How are banks planning to change their computer systems this year?

"The most popular activity by far among banks of all sizes is to buy more personal computers," says consultant Arthur Gillis in his 118-page report manual entitled Automation in Banking 1991. This trend is due mostly to the Pc's multi-faceted applications, says Gillis, who is president of Computer Based Solutions, New Orleans.

To research this manual, Gillis surveyed 480 commercial banks. About half of the banks he contacted were community banks.

Gillis groups all the respondents into four categories. Banks with up to $100 million in assets he calls small community banks; those with $101 to $500 million in assets are large community banks; those with $501 to $2 billion are medium-sized banks, and those with $2 billion and upwards are large banks. Some survey highlights follow:

According to the study, service bureaus are used by a third of the banks in each category except large banks--19% of the banks in the "large" category use this method. In-house turnkey systems are popular among small and large community banks, with 60% and 52% respectively relying on this method. But these systems are not used by many large banks, who overwhelmingly-- 75%--favor in-house MIS department processing. Thirty-nine percent of all medium-sized banks, 14% of large community banks and only 7% of small banks do such processing.

Evaluations. Bankers using a service bureau were asked to evaluate their present systems. Although 75% of small community banks had a positive assessment of their system, only 4% said it was perfect. A fifth of these small banks felt their system was too expensive, whether they liked it or not. The same number said they were planning to replace their present system due to a variety of reasons, such as complexity and requirement of too much attention.

Small community banks ranked their turnkey systems even higher--88% had a positive assessment of their turnkey system, and out of that group, 27% said it was perfect. Only 5% of the respondents are planning to change their system, and 5% complained explicitly about cost, complexity, and amount of attention required.

Among larger community banks using a service bureau, 87% had a positive assessment of their system, 8% were planning to replace it, and 30% found this mode of processing too expensive. …

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