Academic journal article ABA Banking Journal

Service Bureau or In-House? 11 Factors to Consider

Academic journal article ABA Banking Journal

Service Bureau or In-House? 11 Factors to Consider

Article excerpt

Service bureau or in-house? 11 factors to consider

Despite the many changes in bank operations, the number of choices for handling processing work remains two. Twenty years ago, banks had a choice between manual methods or a service bureau. Now banks have a choice of in-house systems or a service bureau.

I like each of the current choices. When it comes to choosing, however, I will be swayed more by the quality of the vendor than by the specific method.

Here are some important factors to consider in making your decision: Software. If the service bureau's software has more features, functions, and capabilities than the in-house software, then I vote for the former. If the in-house system has better software, then I would go with it. Hardware. The size of the host processor has no bearing on processing efficiency. That is, using only 1% of the capacity of a larger computer is not any more efficient than using 100% of a smaller machine. However, processing capability of a computer is very important, whether at a service bureau or in house. A machine pushed beyond its capacity will lead to problems. Operations staff. The quality of the people in a computer room makes a difference regardless of whether they work for you or a vendor. If you have two or three employees who are reliable and capable, that's a vote in favor of an in-house system. If you have some doubts about depending on your own employees, then a bureau will look better. Technological advances. A "latest technology" claim carries an intimidating implication. That's wrong. Latest technology simply means this: excellent software that is constantly updated, and a reliable computer that's less than five years old.

You can choose both for your in-house system. Alternatively, you can rent software, hardware, and people if you go with a service bureau. Each choice can result in the "latest technology" today and in the future if you select the right vendor. Cost. Don't look for any rule-of-thumb in this area. …

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