Academic journal article ABA Banking Journal

That Was the Year That Wasn't

Academic journal article ABA Banking Journal

That Was the Year That Wasn't

Article excerpt

That was the year that wasn't

Calm, peaceful, stable, deliberate, predictable, and a little bit boring. This is how I would characterize the market-place in 1989 as it affected some 12,000 community banks and the vendors who supply their automated systems and services. And if this description lacks glamor, there are no apologies--I've been expecting a plateau of maturity in the business and it's comforting to see it arrive.

This plateau has touched both the banking part and the computer part of the business. In banking, there were no new regulations of the scale of Regulation CC imposed in 1989 that required major system changes. Product and service offerings represented only slight variations of existing services. For the most part, it was business as usual.

Two new technologies developed for large banks--electronic date interchange (EDI) and image processing--but there were no new technologies for community banks in 1989. To me, a new technology must do something that was previously not possible by manual or conventional means. By that definition, nothing happened in 1989 for community banks.

In the computer arena, virtually every computer manufacturer was plagued by fewer orders. Software sales were also slowing down, except in special areas such as systems software and in some personal computer functions. Yet the new versions of Lotus 1-2-3 sold very well, and graphics software and word processors also experienced strong sales.

In general, it was not a banner year for most computer companies. A few months after Richard Miller took over the reins as CEO at the troubled Wang Laboratories, he announced that the computer industry is no longer a booming business and companies will have to adjust in order to conform to lower growth expectations. Layoffs have been higher in the computer industry in 1989 than in any other year in the history of the industry; the New England economy is suffering primarily for that reason.

But given this condition of low growth and relatively little change in community bank data processing, there is still much to report. The following information is derived from a research report I wrote called Automation Trends in the Community Bank Sector--1989. Service bureau vs. in-house. The dramatic conversion from service bureau to in-house systems experienced in the mid-1980s has subsided. …

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