Chemical Banking Corp. and Chase Manhattan Corp. have made the first of what promise to be many systems decisions in their merger-related consolidation.
The companies have decided that the new Chase, which would be the nation's largest bank, would use the retail deposit and customer service systems now used by Chemical.
The decision was highlighted in an internal memo from Michael Hegarty, who is designated to be the new Chase's vice chairman.
It comes only two months after the announcement of the proposed merger. When Chemical merged with Manufacturers Hanover four years ago, similar decisions took more than six months.
Bank executives and outside observers said the speedy decision is proof that Chemical's experience in megamerger consolidation is paying off.
Chemical and Manufacturers Hanover "had done extensive studies for their merger and run through a lot of options, and that's helping things along now," said Lawrence A. Willis, a consultant with First Manhattan Consulting Group in New York.
"Whether decisions involve branch banking, credit cards, or capital markets, we have the methodology, know what to look for," said Edward D. Miller, who would be a senior vice chairman of the merged bank, in a presentation to analysts Oct. 18.
"As a result, we are moving more rapidly than we were able to during the Chemical-Manufacturers Hanover transaction."
The deposit system chosen for the merged bank is licensed from Alltel Information Services Inc., the Little Rock-based technology firm formerly known as Systematics.
In addition, the new Chase also would use Chemical's systems for statements, branch automation, automated teller machines, back office decision support, customer service support, and telephone banking.
Mr. Hegarty's memo said keeping Chemical's retail systems would reduce disruptions to customers and would be less expensive than installing another system or adapting to Chase's technology.
The Systematics software suite already can handle the combined volumes of Chase and Chemical, bank officials say.
Michael Levine, a division executive in retail banking at Chase, said the software had been tested at twice Chemical's current transaction volume and performed well.
Mr. Miller told analysts said that one of the things speeding the selection process in general was the evaluation of the new Chase systems on a "suite" basis - "that is, a group of systems to support the entire business environment, rather than checkerboard solutions."
Overall, the job facing the merged bank is a large one. Chemical and Chase combined have about 20 systems suites that are made up of over 1,500 individual applications.
The systems evaluations account for factors such as scalability, capacity, customer impact, and functionality.
With decisions on two areas behind it, the bank is turning its attention to three other components of its retail systems: insurance, investment services, and customer information.
Bank officials expect 80% to 90% of systems decisions for the new Chase to have been made by the end of the year.
