American Express Bank has signed a 10-year outsourcing agreement with Electronic Data Systems Corp., finalizing a tentative deal that was first announced in June.
The contract, valued at approximately $350 million, calls for EDS to provide information technology services for the bank's worldwide operations.
The Plano, Tex., technology company, a unit of General Motors Corp., will be responsible for the bank's data center operations, technology planning, systems reengineering and implementation, applications development, and end-user training.
In terms of the scope of services and the geographic reach of American Express Bank, the agreement is EDS' largest global outsourcing contract in the financial services sector, according to Craig Dees, a company spokesman.
The contract is also the largest outsourcing agreement made with a bank in 1994, based on dollar volume, according to research from Tower Group, Wellesley, Mass.
Steven D. Goldstein, chairman, president, and chief executive officer of American Express Bank, said the decision to outsource reflects a need to better serve the bank's three major constituents: clients, employees, and shareholders.
The technology platform to be installed by EDS will enable the bank to provide new and enhanced products for clients, give employees access to more powerful productivity tools, and provide shareholders with technology that can sustain revenues and profit growth, Mr. Goldstein said.
"By developing a consistent, uniform systems environment throughout the world, we will gain the flexibility and operational efficiencies necessary to compete in the global banking industry of the future," he said.
EDS' role in the agreement can be broken down into two basic categories: applications development, and data center operations.
The company plans to provide the bank with more flexibility by taking existing bank applications, which run exclusively on mainframes, and moving them to a Unix-based client-server environment. This will help standardize processes across the bank's operations in 37 countries.
EDS will also provide custom software development and integration of the bank's third-party software packages.
As part of the reengineering efforts, EDS will consolidate the bank's customer information - currently stored in multiple data bases - to a single, centralized Sybase Inc. data base, making it easier for the bank to get comprehensive views of accounts.
By providing end-user training, EDS plans to make the bank's transition from old to new processes as smooth as possible, said Mr. Dees.
Under the agreement, the bank's data centers will also be affected.
Pending regulatory approvals, the bank's data center operations in New York and the United Kingdom will be consolidated into a single EDS data center in Stockley Park, outside London.
Most of the more than 200 information systems and data center employees affected by the move have been offered positions with EDS.
Data center employees at the bank's Poole, England, processing center will be relocated to Stockley Park. Employment for some of the workers at the New York location will be terminated.
New York-based American Express Bank, a subsidiary of the American Express Co., conducts business almost exclusively outside the United States, operating in 81 locations in 37 countries.
The $14 billion-asset bank focuses on managing assets for financial institutions and wealthy individuals and offers correspondent banking, foreign exchange, and treasury services.