WHEN MELLON BANK was looking for ways to speed the flow of information to its mutual fund clients, it decided on faxes. But then they found that the faxes were causing a bottleneck.
"We went back to our assembly line to look at what was causing delays in getting data to our customers," said Dave Mills, assistant vice president of Mellon's Laurel Funds group and manager of marketing planning and development. "We saw that in order to get the rates to our customers as quickly as possible, we were sending a fax of an accountant's worksheet."
These worksheets, called daily fund profiles, took a somewhat circuitous route before they finally ended up crossing the fax lines of the bank's customers. The route started in the fund accounting area, where data was copied by hand to daily fund profile forms from the system's terminals.
These forms were then faxed to the bank's shareholder record-keeping department, where they were re-faxed to customers who wanted them.
Employees in record keeping also had to rekey the information into their mainframe system as well as fax the forms to other areas within the bank, including the trust department, the capital-markets' division, and the defined-contribution record-keeping area.
Sending all these forms to customers by fax meant that someone had to stand at a fax machine and send out worksheets one by one. The process was time-consuming, especially since the number of faxes typically reached about 100 a day.
"We realized we had room for some shortcuts," Mr. Mills said. "The other thing we were concerned about was the appearance of the data, the quality issue," he added. "The worksheets did the job, but they weren't very attractive."
Because speed was paramount, little was done to make the worksheets visually appealing. "We couldn't take the time to format attractive-looking documents," Mr. Mills said. "That would have lengthened the process rather than shorten it."
To clean up as well as speed up the data, Mellon decided the answer was to attack the problem where the forms originated -- the fund accounting and shareholder accounting level. One way was to build an electronic bridge between the two mainframe systems and another system responsible for getting the forms out to the customer.
The product that does this is FundStation, software developed by Confluence Technologies Inc. and installed at Mellon in March. Confluence is a four-year-old Pittsburgh company founded by two ex-Mellon bankers with extensive technology experience. The two, Michael Schiller and Mark Evans, specialize in creating products that facilitate communications and data sharing between normally incompatible systems.
Mellon's installation of FundStation uses a network of 25 personal computers running Microsoft Corp.'s Windows operating system. Each PC is also equipped with an internal fax communications device that sends out the daily profile forms automatically to customers as well as other bank departments, without having to print out paper first. The FundStation software calculates historical yields and rates of return over many different time periods, and formats the reports for delivery.
FundStation couldn't have come at a better time for Mellon. "The mutual fund business here is growing in the shareholder base as well as in the number of portfolios," Mr. Mills said. "So we had more and more customers who needed to get more and more information."
The Laurel Funds Inc., for which Mellon provides investment management services and acts as transfer agent. fund accountant, and custodian, has an asset base of $2.4 billion. The funds, which include money market, U.S. Treasury and tax-exempt portfolios, stock portfolios, and short-term bond portfolios, have grown 20% in the last 12 months.
Mellon's adoption of this PC-based system for this growing business shows just how far desktop technology has come in back-office automation. "Mellon has always been known as a |big iron' shop," said James P. Benson, director of research for Ryan Beck & Co., West Orange, N.J. "For them to decide to download to PCs tells you the state of the computer industry and how powerful the PC has become vis-a-vis the mainframe."
While FundStation has smoothed interdepartmental communications at the bank, the system's biggest selling point has been the impact on Mellon's customers. "What it really does for us is improve the timeliness of the data we give to our clients, and that's good from a client service perspective," Mr. Mills said.
This is particularly true in the case of an institutional customer who has, say, 30 mutual fund portfolios with three or four different classes of shares, each weighing in at various rates and prices. The resulting paper shower could be somewhat overwhelming if data are hard to read and organize.
Customers also receive more assurance that the information they're looking at is accurate. Since the system eliminates the need for rekeying, the chance of human error is dramatically reduced.
The account data, which come in a format that Mr. Mills said rivals typeset quality, is now almost guaranteed to reach everyone it's supposed to. "We've reduced the potential for us to forget to send a fax to somebody, the kind of thing a human can forget to do," Mr. Mills added. "The computer is very good at knowing what's been received and what hasn't."
Not only does FundStation remember to send the documents, it also knows who to send them to and when. "FundStation maintains a data base of all the parties who want these reports," said Mr. Schiller, president of Confluence. "The system knows, for example, that Bank X wants information about all its funds but Bank Y only wants to see a daily fund profile for its stock fund or its Treasury fund."
FundStation can also be programmed to hold reports until all of those relevant to a particular client are ready, so they can all be faxed at the same time. Another option is to have the faxes go out only at a certain hour. "Whatever choice you make, the fax number is stored in the system, and when it's time, the fax board in the computer picks up the phone' and dials," Mr. Schiller said.
Having successfully incorporated FundStation into its daily mutual fund activities, Mellon is poised to take the product further. "We're looking at the ability to send data files out to other systems such as trust accounting and participant record keeping," Mr. Mills said.
In other words, Mellon's customers will continue seeing concrete technological advancements in their service -- not just a reasonable facsimile.
