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Regional Data Processing Service Bureau Provides Big Capability for Small Banks.

Regional Data Processing Service Bureau Provides Big Capability for Small Banks

As deregulation of the banking industry proceeds at a rapid pace, managers of smaller independent banks face an increasingly complex problem: how to offer customer services that are competitive with those offered by the giants of the industry and still maintain efficiency in systems management.

A large bank with many branch offices can achieve certain economies of scale in data processing facilities that simply cannot be matched by small banks. What can an independent bank do to compete effectively? Perhaps the best solution to the dilemma is to share data processing and data communications resources with other small banks, so that each has the management systems required to operate efficiently and competitively, yet each only bears a portion of the cost required for sophisticated systems.

That's where companies such as American Data Services come in. As a computer service company that deals exclusively with financial institutions, we offer up-to-date computing facilities and applications software that independent banks can use to compete in this changing arena. Just as important, our data communications network that links each bank with our central data processing facility is so sophisticated that it's as if each bank had its own inhouse computer system. That's critical, because each bank must be able to provide fast turnaround for customer transactions without any worry about whether long-distance lines will fail and cause a disruption in computing services.

To make sure our operations have grown with the times, so that our customers have the most-modern services possible, we are now nearing completion of a major expansion program that includes a new redundant computing system, for on-line processing of both teller and ATM (automated teller machine) transactions, and a new batch computing center for handling all back-office processing, administrative and accounting work. And, to be sure we can provide these services to a customer base that ranges from Cut Bank, Montana, on the Canadian border, to San Diego, along the Mexican border, we also have implemented a sophisticated network monitor and control system to be sure our extensive datacomm network is always available for customer support.

American Data was founded in 1956 and is now the oldest continuous operating servicer west of the Mississippi. The company originally was a commercial data processing service, but bank data processing activities were added when the company was acquired in 1969 by Orbanco Financial Services Corporation. Orbanco is headquartered in Portland and provides financial services through five wholly owned subsidiaries in Oregon and throughout the United States.

Parent Has Five Subsidiaries

The parent company specializes in five primary areas--commercial finance, commercial and retail banking, real estate services, financial data processing and money market services. The five subsidiaries include Northwest Acceptance, the commercial finance arm, with 17 regional offices; Oregon Bank, the

third-largest bank in the state; Orbanco Real Estate Services; Orbanco Securities Corporation; and American Data Services.

American Data began offering financial services to independent banks other than the Oregon Bank in 1975, and now offers services only to financial institutions. Because we provide services to a wide variety of customers, the diversity and expertise available are broader than those found in many service companies. Our services range from maintaining complete data processing support for customers without in-house systems to providing additional capabilities or enhancements to customers who already have systems. We provide these services via a data communications network that extends throughout Oregon, Washington, Idaho, Montana, Wyoming and California, and that links Northwest Acceptance offices in Atlanta, New York, Chicago and Houston. The variety of services available is quite extensive.

Service Bureau Tailors Programs

American Data offers a combined deposit application system that lets member banks tailor their own programs for demand deposits, savings accounts, certificates of deposit, NOW checking accounts, individual retirement accounts (IRAs) and Keogh retirement programs. All of these are generated within a single, option-driven application system so that each bank can customize its banking plans to its retail customer base for handling of service charges, interest calculations and the like. Loan programs are also available for bank data processing, including installment, commercial and mortgage loans. Our newest support services include on-line processing of ATM transactions and handling of Telebank services for customer bill-payment processing by phone.

Beyond these end user-oriented systems, American Data also offers its bank customers in-house applications such as payroll processing, general ledger, fixed asset accounting, accounts payable, accounts receivable and other standard accounting systems.

We presently serve some 30 banks in our six-state area and handle transaction processing for about 60 ATMs--a number that's growing by four to seven machines each month. Our system even permits the processing of inter-bank transactions between member ATMs.

Until recently, our primary data processing work was handled in a batch mode using Burroughs B4800 and B3800 central processing units (CPUs). We use a six-processor Tandem computer to handle all on-line teller and ATM transactions. Complete deposit information on all bank accounts is maintained on the Tandem system. If the bank is an application processing customer as well, a duplicate copy of this data base is maintained on the Burroughs system for batch updates for administrative use. The two Burroughs CPUs will soon be replaced with an IBM 4341 computer for batch operations. There will be no front-end link between the Tandem and IBM computers; instead, we will transfer files between the two each evening for data-base updates on the batch system.

Central Site Links Terminals

These central-site systems are connected to more than 650 remote terminals and ATMs in about 150 locations throughout the West. In some locations, remote printers are provided for printback of data and management reports for our users. All areas are connected in a leased-line network that provides service around the clock. The ATMs and remote printers are in use every day, while the administrative terminals are only used during daytime hours Monday through Saturday.

The American Data Network (ADNET) is built around three remote hub sites that serve local areas through a star arrangement of multidrop and point-to-point leased telephone lines. Our total of four hubs are located at our headquarters in Portland and at centers in Grants Pass, Oregon; Billings, Montana; and San Diego. The Grants Pass site is linked to Portland via a 56-kb/s transmission line, while Billings and San Diego are linked with 24-kb/s and 14.4-kb/s lines, respectively. The Grants Pass link is also a digital transmission line, to provide higherspeed service.

From these hub sites, local lines are provided that can handle transmission rates at 1200, 2400, 4800 or 9600 bits per second, using standard bisynchronous communications protocol. The actual choice of speed provided to a particular customer location is dependent both on the type of transmission and the volume of transactions. Only about a half-dozen customers presently require 9600-b/s modems. We have about a hundred 4800-b/s, seventy-five 2400-b/s and fifty 1200-b/s modems distributed at remote user sites. We also are beginning to use some 14,400-b/s modems at selected test sites.

HQ System Handles Transactions

The Grants Pass and Billings hubs have 12 primary data channels, and we use data multiplexers to handle transmissions for the multiple lines to local areas. All ATM transactions are handled by the Tandem in Portland, using Base 24 applications software from Applied Communications.

One of the most-important concerns with any data network is its availability. The best computer equipment in the world is no good if the network that links it is not up and running when it's needed. At American Data, we view "uptime' as including all three elements of the network: the central computer, the remote terminal and the phone link. The weakest part of the system, because of the environment in which it is located, is the leased line. For this reason, we have installed highly sophisticated modems and network monitor and control systems by Infinet, of Andover, Massachusetts.

All of our modems feature that vendor's sideband diagnostic capability that permits checkout of line quality from the hub site. Each modem's network control microprocessor can be monitored to detect negative status changes anywhere in the network, yet data continues to flow at full speed and is totally unimpaired during the diagnostic procedures.

To manage the monitor and control operation, we use an Infinet EMS-One system to continuously poll all active ports to observe status changes in lines, modems and terminals. When a failure occurs, it is reported; and as soon as a line comes back into service, that status change is reported as well.

The EMS-One can automatically initiate off-line quantitative testing of circuits as well, to analyze the condition of each modem, line and interface in specified portions of the network. Performance degradation can be spotted and corrected before it becomes a failure.

In addition to these automatic preventive maintenance capabilities that we use overnight, when there is little use of the network, the EMS-One also provides manual diagnostics and remedial commands for investigation and correction of specific network failures. In addition to the automatic tests, both on/off and oscilloscope-type displays can be produced using a real-time interface monitor. Analog measurement capabilities provide TX and RX line level measurements while the system is transmitting data. An invalid inbound signal test permits isolation of a false telephone company loopback, a false modem loopback or a foreign signal on the line. An integrated audio monitor allows operators to listen to both TX and RX signals.

This same monitor and control system offers remedial capabilities for automatic-answering dial backup, internal "hot-spare' modems and the ability to automatically detect and disable a streaming terminal. Hot-spare locations are determined automatically and are tracked after spares are activated. Operators can view all locations from system memory via the control or system printer.

All of this capability provides a number of benefits both to us and to our customers. One of the most-important improvements that has resulted from the use of the control system is that we now have the ability to identify line problems sooner and isolate causes before we even call the responsible vendor. This helps speed up service restoration dramatically; as a byproduct, we now have much better credibility with our vendors. If we call the phone company and report that a specific line is out between two specific points, it knows we're giving good information and can get right on the problem without having to check it out from its end. If we identify an equipment problem, we can often provide enough information to the vendor so that the service technician can bring appropriate spare parts to resolve the problem more quickly.

In many cases, we can detect service degradation before it results in a failure. The greatest usage of our network generally falls between 8 am and 5 pm during weekdays. Any marginal circuits that are detected during non-peak hours can be worked on overnight, when traffic is reduced. We still count the off-hours in our availability figures, however, It's like the proverbial tree falling in the forest. We assume, that even if no one is using the equipment, it should still be available if needed.

System Provides Printed Log

The EMS-One system also provides us with a printed log of all service interruptions, including elapsed time until repairs are finished. These records can be used by our customers to request telephone company credits for interrupted service, where applicable.

The ultimate benefit of the system, however, is that our network is available for use an average of 99.7 percent of the time. That amounts to downtime of less than two hours per month, on the average, and this is usually spread out over an entire month, so that the typical line or equipment failure accounts for just a matter of minutes.

Future expansion plans for the ADNET network and our monitor and control system include testing of a network management system (which can use the service data base developed with the EMS-One facility to prepare management reports) and evaluation of alternatives to leased lines for more cost-efficient data transmissions.

Although we have no definite plans yet to install a network management system, we are considering an opportunity to do Beta testing for a new Infinet system. This would give us the ability to automate many functions that are now manual on the EMS-One system and to provide highly detailed reports on system status, problems, usage and history.

Company Contemplates Changes

With regard to data transmissions, we have no preconceived notions as to what changes might be made in terms of network links. We're open to anything that will help us provide even better service to our customers, but it must be cost effective. This probably puts satellite transmissions out of the picture for the present: Since most of our customers are not in major metropolitan areas, ground stations would be prohibitively expensive. But we're looking at microwave transmission possibilities as an alternative to land lines. The number of long-distance carriers available is rising every day, and it is not unreasonable to expect that changes will be made.

Any future network changes, however, will be made compatible with our present system to avoid degradation of service to our customers. Our goal has always been to provide such good network service that customers forget they're even using a network. As far as they're concerned, it's an in-house system. Our monitor and control systems play a major role in our ability to do what we do best--that is, provide quality financial data processing services over a wide geographic area.

Photo: American Data Services' Jack Young, senior datacomm analyst.

Photo: Chuck Swanda, American Data network control operator, checks status of a leased-line repair to an ATM.

Photo: American Data's processing center is connected with remote customer terminals and printers via modems.
COPYRIGHT 1985 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1985 Gale, Cengage Learning. All rights reserved.

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Author:Young, J.
Publication:Communications News
Date:Jan 1, 1985
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