Microcomputer-Based System Handles Bank's Electronic Funds Transfers.
Although most areas of banking have benefited from the automation revolution, one key area--the transfer of corporate customers' funds--has remained a collection of manual and semi-automated operations for all but the largest banks. These "money-center' banks can easily afford mainframe- or minicomputer-based electronic funds transfer (EFT) systems costing as much as $1 million.
But the cost of these EFT systems has prevented the vast majority of banks from competing with money-center institutions in the deregulated bank-services environment, since large corporate customers generally require a level of funds-transfer security and accountability that only a fully automated EFT system can provide.
Recently, however, The Arizona Bank in Phoenix automated its funds-transfer operations with a microcomputer-based EFT system called WireNet from BankPro Systems of San Francisco. With this new system, which employs a local-area network of IBM Personal Computers, the bank expects to minimize increases in its funds-transfer staff, recover up to $20,000 per year in previously uncollected wire-service fees, and save $10,000 annually in wire-service-terminal leasing fees.
According to Robert Fink, the bank's vice president of systems management, the micro-based EFT system is streamlining his institution's funds-transfer operations by eliminating the need for funds-transfer operators to interpret wire instructions received from the bank's branch offices.
"As a result, we have sidestepped the need for a projected 50 percent increase in our wire-room staff over the next three years,' says Fink. "But far more important, we have created a secure funds-transfer environment in which the chance for error and fraud are vastly reduced.'
The Arizona Bank's corporate customers utilize its funds-transfer services to optimize their cash resources. Electronic transfers provide fast, controlled funds movement. The bank presently uses three major EFT networks--Fedwire, BankWire and TelexII/TWX--and will soon be using S.W.I.F.T.
The Arizona Bank's WireNet system employs 10 IBM PCs in a local-area network, including eight workstations for entering and reviewing wire transactions and two PCs with hard-disk storage that are used as data servers to store information accessed by the workstations. An eleventh PC will soon interface the network to the bank's IBM 3081 mainframe computer. All of the PCs are located in a secured wire-transfer room in the bank's Phoenix headquarters.
The wire-transfer department serves the mid-sized bank's 95 branches by processing about 250 incoming and 250 outgoing wire transfers per day. Routed via any of the three current wire services, the transfers represent approximately $500 million.
"With our funds transfers growing at an average rate of 20 percent per year, we saw that we would soon be in real trouble if we didn't institute some centralized, automated processing procedures,' said Fink. "Even if we kept adding staff, our manual system would have left us vulnerable to costly errors in a high-volume funds-transfer environment.'
According to Fink, a major shortcoming of the manual system was the inability to provide customers with their account balances immediately upon request. Generally, the bank could provide account balances only at the end of each day. If an error had occurred, an investigation to correct it might take days, particularly if mail inquiries were involved.
The funds-transfer room was also becoming swamped in paper. Each transfer typically entailed several documents, and the accumulation of paper contributed to a hectic workplace in which productivity was compromised and the chance of error greatly increased. These errors could include transfers credited or debited to the wrong account, transfers given the wrong date, and even, potentially, the transfer of funds to the wrong bank.
"We needed a way to provide our customers with up-to-the-minute account balances, and a way to minimize the possibility for error or mishandling--at a price we could afford,' stated Fink. "Beyond that, we wanted a system that would expand to accommodate a growing volume of funds transfers.
"The WireNet system was the only EFT system that met our performance criteria,' he said. "And, as a local-area network, its modular design permits us to add workstations and data servers as they're needed.'
With its EFT system, The Arizona Bank maintains an on-line record of all funds transfers in a PC file server, rather than storing hard-copy records in file cabinets. As a result, the bank can closely monitor the status of its corporate customers' accounts, and can provide customers with accurate, timely balances and other account information.
According to Fink, the system's on-line inquiry capability is also invaluable for investigating any transaction errors. A funds-transaction history file eliminates the often lengthy detective work entailed with a manual EFT system.
Provides Operator and Workstation Passwords
The system has also greatly improved funds-transfer security by providing operator and workstation passwords. A detailed profile is maintained on each operator and workstation that identifies the functions the person or station can perform, and defines other limitations such as the dollar value of a transaction.
Another key security feature is second-party review of all transactions, both incoming and outgoing. When the system's review operator examines a transfer, the information entered or changed by the entry operator is highlighted on the PC's screen. Each transaction must be approved by the reviewer before funds can be transferred. If a transaction is rejected, the review operator must specify the reason.
"Although we never had any serious security breaches with our manual system, the opportunity for fraud was a built-in hazard,' said Fink. "With the security measures we now have in place, I sleep much better at night.'
The Arizona Bank uses the WireNet system to process all of its EFT transactions. Before the bank automated its funds transfers, transaction data for outgoing transfers had to be structured by the operator into the particular format required by each wire service, and entered on that service's dedicated terminal.
Using the new system, the entry operator simply keys the transaction data--such as customer account, dollar amount and receiving bank--into a formatted screen on his or her PC. The data is automatically formatted by the system into the appropriate wire-service format.
"By providing the operator with a uniform interface, the system saves a tremendous amount of time, both in transaction processing and operator training,' remarked Fink. "What's more, by getting rid of the wire-service terminals, we're saving $9,000 per year in leasing fees.'
The system also simplifies the processing of incoming funds transfers, which are received and stored by one of the system's data servers. When an operator calls up the incoming transfers on a workstation's screen, the lower half of the screen shows the incoming transfer in its "as received' format, while the top half displays the system's formatted transfer fields. The operator can thus access both formats without a paper source document.
"All in all, the WireNet system has proven a real boon to operator productivity,' Fink said. "Before installing the system, I had projected an increase from our current six-person staff to nine persons over the next two years to handle increased wire activity. With WireNet, I believe our existing staff can easily accommodate that growth.'
Photo: The Arizona Bank's vice president of systems management, Robert Fink, discusses funds-transfer operation with a colleague at one of their institution's microcomputer-networked PCs.
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|Date:||Jan 1, 1985|
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