Let 315 Do It

In the growing blizzard of paperwork piling up on U.S. business, the country's 13,500 commercial banks are slogging through the deepest drifts. Last year, the public scribbled 14 billion checks--almost double the number of a decade ago--and by 1975 they will be writing 29 billion annually. Since the end of World War II, the number of bank accounts has risen 33%, commercial loans 113%, mortgages 290%, and consumer installment credit 850%. The answer to the spreading prevalence of paper is mechanization, and the nation's big banks have set up their own computer systems. For smaller banks with deposits of $100 million or less--which means 95% of all banks--computers cost too much.

Now small banks are developing a neighborly solution of their own. Nine banks in Hartford, Conn., plan to share a computer center; small banks in New York and Kansas are also taking up the idea. Such centers should make smaller banks competitive with big ones. The Hartford pool, designed by Chicago's Booz, Allen & Hamilton, will start in July, handling overnight all the deposit, savings and installment loan accounting for the nine banks. Each bank will simply have its entries typed up in special magnetic ink. At the close of day a truck will pick up the records and whisk them to the computer center, where an automatic reader will riffle through them and beep the data to a National Cash Register 315 computer. The computer system will do all the rest, from posting individual deposits and withdrawals to printing up customer statements.

The banks will pay $18,000-$20,000 a month for the service, and after the first year, when the full start-up costs are recovered, they will begin showing some savings--though they won't estimate how much. Besides whittling their direct costs, the nine banks will also clip a day off their old account posting time, be able to offer better and cheaper service to customers. Programming ahead for the computer pools, Booz, Allen's Neal J. Dean, partner in charge of management information systems, sees the day when all banks will cease being banks as people know them and become a network of computer-run "financial utilities." When that day arrives, the depositor may not even get a glimpse of his paycheck. His employer would send it directly to the bank, and he would need only a banking credit card, good for buying against his deposits everything from Kleenex to Cadillacs.

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