Optical Disk Storage Spinning into Wider Use
Epper, Karen, American Banker
Optical disk technology, long held out as a savior to large banks with a plethora of paper, has been increasing in popularity among banks both big and small. Originally perceived as a way to access check images quickly, the technology is now used for mortgage documents, letters of credit, signature cards, and any other documents banks need to store and retrieve.
Cost effectiveness, a need to eliminate the vast amount of paper and costly microfiche, and the ability to access information more quickly and easily have recently driven even communitysize banks to embrace this medium for storing records of all kinds. Bankers have been able to find more range in terms of the available systems and their costs - from as little as a few thousand dollars to a few million.
Banks Seen as Innovative
"Optical disks, intended to be used in conjunction with imaging systems to store digitized images, are finding applications in banking where image technology has yet to be applied," said James Moore, a consultant for Mentis Corp., in an August 1993 report. "With the cost of optical disk storage coming down, large banks are finding it cost effective to download customer information created within their internal operations to optical disk."
Optical disk usage has had particular resonance in making banks' lending areas and customer service operations more manageable. One 12-inch optical disk can hold more than one billion bytes of information - translating to mounds of paper, or one month's worth of checks for a large bank. Most bank users have moved far beyond a stand-alone optical terminal to large jukeboxes, which can hold several of these disks.
It Works in N.J.
At Central Jersey Bank, a $1.7 billion-asset bank based in Freehold, N.J., replacing reports kept on microfiche and paper with laser disk paid off fast, said Jack Watkins, senior vice president for operations.
"By eliminating paper and having it all on optical, the departments can access the reports faster on a daily basis," Mr. Watkins said.
Central Jersey started using an optical storage system in January 1993. Within a year it had recouped its $300,000 investment in hardware and software, Mr. Watkins said, and since then it has saved in excess of $100,000 more.
Moreover, he added, the system has saved the bank time and trouble and helped it provide better service.
Central Jersey is currently expanding its optical disk project to accounts payable and letters-of-credit divisions. Mr. Watkins expects the technology to move further into mortgages during the first quarter of 1995, to streamline the lending process.
"Optical disk can replace anything we would have on microfiche," Mr. Watkins said.
Prices Coming Down
Bankers said that disk, unlike fiche, has proved more accessible, less wasteful, and cheaper - even with the up-front costs involved in a new system - compared to the costs of fiche. While the cost of optical disk media has come down drastically over the past few years, they said the price of fiche has flattened out. The price of optical disk hardware has declined between 30% and 45% a year on a per megabyte basis, according to IBM spokesman Tom Beermann.
But microfilm vendors such as Imnet Systems might debate that point.
According to Les Cowie, the vice president of marketing for Imnet, microfilm can provide the same response time and the same cost effectiveness, and hold the same amount of information as optical disks in some cases. His company espouses a hybrid approach to data storage and performs a cost analysis to determine how individual clients should convert files.
"I think a lot of people are being misled into thinking optical disk is imaging" Mr. Cowie said. "Imaging means electronically requesting an image and having it delivered electronically."
Although big banks are often the ones to set the pace with technology, smaller banks may have had the advantage in the optical disk arena because the earliest systems were based on a small local area network platform, said Vic Jipson, a lab director for IBM systems division in Tucson, Ariz. …