When it comes to choosing the right computer systems, bankers sometimes find that political considerations can be just as important as technical ones.
That seems to have been the case last week, when BankAmerica Corp. decided to end seven-month-old discussions with Premier Solutions Ltd., a Wayne, Pa.-based vendor of accounting and reporting software for trust and global custody, in favor of using a system developed in-house.
BankAmerica - which since 1991 has been shopping for a single replacement for its multiple, disparate systems for institutional and master trust and custody - had narrowed its options down to Premier or an in-house system.
Premier's software was viewed by many B of A bankers as the quickest way to get the most advanced technology for the bank's trust operations, where competition has been increasingly cutthroat over the past few years.
Earlier Disaster
A move to Premier would have been controversial however, because BankAmerica had already blown $80 million on a previous version of the company's software that the bank failed to get running in 1988.
But since that fiasco, Premier has had several successful installations of its revamped software, restoring most of its credibility with bankers.
Despite early indications that it was leaning toward Premier's software, the bank couldn't pull the trigger. Last week BankAmerica officials told staff members in New York that the bank will revamp its own trust software, called Gclear, which was originally installed by Security Pacific Corp. four years ago, before the two banks merged.
Other In-House Systems
BankAmerica officials also said they will continue in-house development of software for accounting for securities in different currencies and generating customer reports.
By building in-house, BankAmerica will probably spend more than the tens of millions that an off-the-shelf system to handle institutional, master trust, and custody would have cost, according to trust experts.
Why did BankAmerica do it? According to several people who participated in the talks, Premier's champions - Lee Harbert, senior vice president, and Richard Griffith, executive vice president of global securities services - had several problems.
One was the complexity of melding the operations of two such different businesses and cultures as BankAmerica's and Security Pacific's.
Each bank served different types of customers, with BankAmerica's corporate clients requiring different kinds of accounting and reporting than Security Pacific's Wall Street clientele.
Another Fiasco Feared
Given BankAmerica's unpleasant experience with Premier, many in the trust industry were surprised that the vendor was even being considered, even though other big banks such as Chemical Banking Corp. and Bank of Montreal had already chosen its system.
Several sources said the technologists in the bank, headed by Marty Stein, feared they would risk their jobs if the bank again installed Premier software that proved faulty. However, a spokeswoman for the bank said that was not a factor.
"Although they probably had several logical reasons for not choosing Premier, I'm sure the political consequences of selecting that system were not overlooked," said Hal McIntyre, managing partner of the Summit Group, a bank consulting firm based in New York and New Jersey.
For its part, Premier was also said to have had its own concerns about taking on too big a project. The vendor was said to have limited the discussions to global custody, even though BankAmerica was looking to replace nearly all its trust and custody systems.
Starting Small
Had a contract been signed, Premier would initially have converted only about 500 accounts, from a global custody system inherited from Security Pacific in New York, one in London, and a third, smaller system administered in Australia, the sources said.
Perhaps as important was that the BankAmerica trust executives didn't have the support of the securities processing staff, many of whom are former SecPac employees, sources said.
In its haste to consolidate the two banks, BankAmerica has alienated many former Secpac employees upon whom it still must rely to make the transition to a consolidated operation, sources close to bank said.
