BankBoston Corp. is trying to reinvent its consumer image, launching an 18-month reengineering program for its domestic bank unit.
The program-an extension of the bank's "managing for value" strategy- begins just as BankBoston is putting the final touches on its integration of BayBanks Inc., which it acquired last year.
Charles K. Gifford Jr., chief executive officer of the $68.2 billion- asset banking company, said in a telephone interview, "We need to totally relook at how to do a better job for customers."
Market analysts said such programs are becoming increasingly common. Last week Citicorp announced an $889 million restructuring designed to cut expenses and improve service quality primarily in its consumer banking unit. Fleet Financial Group in Boston helped begin the trend in 1993 with its Fleet Focus program.
"This is an industry that really has problems generating revenue growth," said Lawrence Cohn, an analyst at Ryan, Beck & Co. "If you are able to distinguish yourself through quality, you can have a significant competitive advantage."
An internal memorandum distributed to BankBoston employees Oct. 17 said the program's objective was to "transform" customer service, increase revenue generation, and better differentiate the bank's retail services from those of its competitors.
"We cannot be complacent," Mr. Gifford and Henrique de Campos Meirelles, the bank's president and chief operating officer, wrote in the memo. "We know that we have to continue to grow and adapt."
BankBoston may be feeling the lash of competitive pressure more severely than its peers outside New England, analysts said.
The top five banking companies in the Boston metropolitan area command 85% of deposits, according to data from Sheshunoff Information Services. In Providence, R.I., the top banks have 97.5% of the market, and in Hartford, Conn., they control 93.5% of deposits. The average deposit market share concentration in the nation's 50 largest metropolitan markets is 78%, according to Sheshunoff.
"In these markets, if the other guys are good, you really have to step it up," said Anthony Davis, an analyst at SBC Warburg Dillon Reed.
Mr. Gifford, however, said the new program was not a response to competition. "We have the strongest brand in New England," he said. "This is not being done by an institution that's losing money. We're growing revenues."
Mr. Gifford said he has been "reasonably pleased" with the integration of BayBanks but added that customer service has been stymied by bureaucracy.
"We realized that we had process upon process upon process," Mr. Gifford said. "It's a function of how the bank has grown over the years."
Like many of its peers that have gone through acquisitions, BankBoston has heard complaints from customers about service quality, Mr. Gifford said.
The reengineering was announced to employees two weeks ago and is to last 12 to 18 months, with the first stage to be completed next spring. Mr. Gifford said no layoff or cost-savings targets have been set.
The program will not directly affect BankBoston's corporate finance, capital markets, or Latin American operations. Mr. Gifford said those areas are showing strong revenue growth, while the consumer bank business has been growing more slowly because of the BayBanks integration.
Analysts said it is unlikely that BankBoston will engage in the same "slash-and-burn" strategy as some of its peers.
"They have been very conscious of expenses, given their investments in Latin America, capital markets, and mezzanine financing," said Sally Pope Davis, an analyst at Goldman, Sachs & Co. "I think the goal is to minimize superfluous spending."
