First Interstate Bancorp, Los Angeles, is in the home stretch of a multiyear, multimillion-dollar project of systems consolidation.

The $57 billion-asset bank is entering the fourth year of the project, in which it has methodically consolidated a variety of systems in over 1,100 branches in 13 states to a single banking platform.

The bank will use its new applications to deliver common products and services to every branch.

"We decided three years ago to embark on the project so that we had one common system for the entire area for loans, general ledger, and deposits," said Richard W. Tappey, executive vice president and manager of First Interstate's bank services group. "We are now getting down to one system for each functionality."

"It's a huge endeavor," Mr. Tappey added, as he described the complexities of such a large-scale project. "We can see the organization getting better and better as we go through the conversions."

To date, First Interstate has collapsed 11 bank data centers, converted eight consumer loan systems, and consolidated its general ledger, commercial loan, trust, real estate, check operations, and automated clearing house transaction systems.

Its biggest challenge has been converting more than 4.5 million commercial and retail customers onto its new common deposit system. The process has taken 18 months, and is more than half done.

In conjunction with revamping its deposit system, First Interstate will reduce the number of deposit products on the market from approximately 3,000 to as few as 80.

The entire effort, which is on schedule for completion in November, is a part of First Interstate's broader objective to improve customer service and to achieve cost savings.

Investing just over $4 million in systems and labor, officials estimated the project has added about $94 million to its bottom line, mostly through staff reductions.

The bank was able to slim down to approximately 700 from a pre-project level of over 2,100 employees.

C. Webb Edwards, the executive vice president who orchestrated the project, said the game plan was to get "our technology side of the house in the proper format to support our business strategy."

"You can see what a common process, product, and application does for us as it relates to servicing the customer," Mr. Edwards said.

"Imagine going anywhere in the western U.S. and having maintenance done on your account," said Mr. Edwards. "You can be treated like a customer regardless of where you choose to do business."

Incidentally, Mr. Edwards, who reported to Mr. Tappey, soon will head to Minneapolis-based Norwest Corp. to manage yet another large-scale systems integration project. (See accompanying story on this page.)

Bert Ely, a principal with Ely & Co., a bank consulting firm based in Alexandria, Va., said the industry can anticipate many more such projects, but added there were still a host of issues bankers must resolve.

"The challenge with something like this is you still have to have some local flexibility, particularly in terms of what your pricing is," Mr. Ely said. "Sometimes they don't provide local management with enough."

But Tim Sullivan, a senior vice president with First Interstate, said although the bank will be presenting a "common face" to all its customers, the systems will allow for flexibility as branches compete in local markets.

"The systems are designed to allow for pricing at local levels," Mr. Sullivan said. "The concept was to have the outlines and details of the products be the same across the territory, and then allow local differences in pricing to meet market."

The move was taken with interstate banking in mind, according to First Interstate officials, who said they were confident of the restrictions being lifted.

Once the common system conversion is completed, the next stage will be the installation of software with "predictive capabilities," officials said.

The new software will help the bank become more "pro-active in selling products to customers," Mr. Edwards said. "Ultimately it will improve the cross-sell ratio."

The consolidation has not been without pitfalls, officials admitted.

"Just imagine what the company was going through," said Terry Allen, a senior vice president who has worked on the project since its beginning in 1992.

"The company was downsizing itself, while at the same time we were introducing magnitudes of change every weekend. I'd describe it as very high with tension and risk."

As a rule of thumb, First Interstate kept the integration as "vanilla" as possible for quick and efficient conversions.

"One of the principles that we operated under was that we were going to use packaged software," said Mr. Allen.

Apart from Mr. Edwards' impending departure, the consolidation teams have developed into a tightly knit unit, thanks largely to scores of conversions conducted every week.

The bank also had an acquisition strategy for the last several years running concurrently with the project, requiring the teams to operate within tight schedules.

"We've gone into a pattern and a structure that's giving us more confidence all of the time," Mr. Allen said. "This has been kind of a watershed year, at least from a common systems perspective."

To achieve its goals, the bank worked with several of its vendors, particularly Hogan Systems Inc., Dallas, for its core accounting software.

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