JOHN B. McCOY is no propeller head.
Sure, he started his career in Banc One Corp.'s back office, at various times running the bank's customer service unit and its credit card shop, both high-tech havens.
But he isn't interested in technology for technology sake. Like many chief executives, Mr. McCoy wants systems that can accomplish two objectives: first, increase revenues and, second, help weave together his far-flung branch network.
Very soon, he may get exactly what he's been looking for. Banc One is about to install what may be the most advanced computer system in the industry.
Called the Strategic Banking System (SBS), it is the key to Mr. McCoy's ambitious marketing strategy. The goal is to tailor services, prices, and product mixes to each market or even each customer that is served by Banc One's 57 banks and 867 branches.
The SBS project is being closely watched because Banc One has long been considered a leader in matching sophisticated marketing schemes with the right support.
John McCoy's savvy came through clearly in one particular observation he made during a recent interview with the American Banker. His point: Technology can be used successfully only if technologists either think like businessmen are guided by them.
Just look at SBS, which was jointly developed by Banc One, Electronic Data Systems Corp., and Norwest Corp. Banc One contributed about 300 bankers to the development effort, and EDS, about an equal number of programmers. For months, the bankers representing every part of the bank answered EDS's questions about what their jobs were.
That intelligence has raised expectations for SBS. After all, Banc One is known as an institution that does things right. Its return on assets, at better than 1.5%, surpasses that of any U.S. money-center or superregional bank.
Banc One's franchise has already spread across seven states in the Midwest and Southwest. Once pending acquisitions are completed, the banking behemoth will cover 11 states, growing to 1,300 offices and $76 billion in assets.
Banc One's philosophy is straightforward: Buy strong banks, leave good management in place. But technology is crucial.
The head office helps its banks reduce costs and boost profits by eliminating their individual data processing centers and having them use the same systems as the rest of Banc One.
Like most banks' computer systems, SBS aims to process transactions at the lowest possible cost. But the system is different in one important way: Pains have been taken in its design so it can capture demographic and profit information that can be used to assess and enhance customer relationships.
The system has been in use for several months at the 19 branches of Banc One's Marion and Mansfield, Ohio, banks. Early reports show market share improvements, but bank officials said it is too early to tell exactly how much can be directly attributed to the new system.
Clearly, Banc One isn't waiting for a definitive report from the bean counters. Mr. McCoy is confident enough of the system that he plans to begin installing it in all of Ban One's branches next year.
Without question, Banc One has a lot riding on the SBS. So far, it has cost its creators $100 million. And it's not finished yet.
Still under development is critical software that will help branch officers make decisions on many consumer loan applications, including installment loans and revolving credit.
In adopting a project of this scale, Banc One took a big risk. A similar effort was started in the early 1980s by 20 regional banks, only to founder in part because of the sheer size of the programming effort. Tens of millions of lines of code had to be written. In fact, even with the combined talents of the three SBS partners, the software development is running behind schedule. In the end, the project's scope proved far larger than anything either EDS or Banc One had anticipated.
Despite the obstacles, Banc One held firm throughout the late 1980s, even as other banks were ditching their high-tech ambitions. John McCoy apparently knew that cost control and niche marketing would be crucial in the 1990s.
Part of the reason Banc One stuck to its guns, Mr. McCoy said, is because the bank worked out a deal with EDS that put a ceiling on Banc One's investment in SBS development. Mr. McCoy estimates that Banc One has paid about 20% of the costs; Norwest, considerably less, with EDS putting up the lion's share of the project's funding.
What Banc One brought to the party, without doubt, was its impressive record at melding technology with business needs. During the 1970s, the bank installed the planning and monitoring system that has helped it pursue an aggressive acquisition strategy. By putting acquired banks on the system, Banc One has been able to closely monitor its businesses: to see which bank is cutting its rates on second mortgages, which is earning the most, which has the highest expense ratio.
"That system is key to their success," said Dennis Shea, a banking analyst at Morgan Stanley & Co. The Strategic Banking System "is the next generation, the next logical step."
Mr. McCoy said SBS will help the bank retain retail and corporate customers at acquired banks by quickly giving a snapshot of all their relationships. If a customer has a deposit account at recently acquired Team Bank in Texas, for example, and a credit card from Banc One, the bank will quickly know that and market to the customer accordingly.
"A single customer will be even bigger and more important [to the merged entity] than he was to the original bank," said Bobby Grisham, president of a unit dedicated to developing systems for large financial institutions at EDS.
Although EDS is currently focused on software development, it will eventually market the system to other banks. Banc One will receive royalties from any sale.
In his characteristic easygoing style, Mr. McCoy dismisses the idea that selling the system to other banks will diminish its usefulness to Banc One.
"What we've found in technology is that the first person to put a new system in ends up so far ahead of competitors that it doesn't matter." said Mr. McCoy. "If they decide to put in the system two years from now, by the time they've got it in, we'll be four years ahead of them."
At a Glance
Banc One Corp. Headquarters: Columbus, Ohio Assets: $49 billion Employees: 33,000(*) Deposit growth 1988-92:1988 $19.5 billion1989 $21 billion1990 $22.3 billion1991 $37.1 billion1992 $38.1 billion
(*) As of June 30, 1992
