To aid in consolidation efforts and smooth the way for further acquisitions, Keycorp has signed on Systematics Financial Services Inc. to assist with back-office conversions.
Key Services Corp., the data processing subsidiary for Cleveland-based Keycorp, has enlisted the outsourcing firm to help handle the holding company's merger-related management, planning, and technical support.
Using an outsourcer's assistance has become a more popular decision among bigger banks, especially as a way to ease the workload associated with acquisitions and mergers.
Executives at the $63 billion-asset bank holding company plan to leverage Systematics' experience in back-office conversions as the bank continues its steady growth, highlighted by its merger with Society Corp. in March.
Although Keycorp has its own massive data services unit - headed by Allen J. Gula Jr., formerly of Society - officials from the holding company decided to take a more specialized approach to align their rapidly growing operations.
"The banks that you would expect to survive are going to grow through consolidation," Mr. Gula said. "You have to get things done quickly, and if you can't do it alone, you have to do it with partners."
Digesting Acquisitions
Keycorp already has accumulated more than $3 billion in pending acquisitions this year, he said, and the banking company is depending on Systematics to help lessen the ensuing backlog. The outsourcer will focus primarily on data center and systems conversion at first, Mr. Gula said, but the two companies may work on systems development and in other areas in the future.
Currently, Keycorp can absorb an average acquisition in four to eight months from the announcement of the deal, and Mr. Gula added that this partnership will help the service company stay on course.
Outsourcing Trend
Keycorp is not the only large banking company taking this route. Many of its aggressive competitors have already turned to outsourcers to ease the way to a more painless consolidation of their business.
Systematics, headquartered in Little Rock, has handled similar arrangements for First Union Corp. and NationsBank Corp. for more than a year now.
M&I Data Services, the outsourcing unit of Marshall & IlsIcy Corp., has performed a similar function for banks like Chase Manhattan Bank Corp. and BankAmerica Corp. - converting the money centers' out-of-state acquisitions to common systems.
With the consolidation shrinking the available market for outsourcers, this arena could provide a more viable outlet for servicing in the future.
Consolidation Specialists
"There's a realization on the part of some of these big banks on the consolidation trail that the methodology and tools it takes to do a large-scale data processing conversion are available at specialized companies like Systematics." said Clifford E. Newkirk, the senior vice president for outsourcing sales for Systematics.
Key Services' commitment to conversions - stemming from Society's desire to seamlessly envelope acquired companies - helped to open the company up for this outsourcing option, Mr. Newkirk said.
