SCOTTSDALE, Ariz. - Most bankers these days say that they have to integrate the Internet throughout their companies if they are to get the most out of it, but there are subtle differences in how some of the top banks go about this.
At the Ninth Annual Financial Services Technology Forum: Online 2003, the first six speakers, from some of the biggest banks in the country, all addressed the exact same topic: how to transform the Internet from the answer to all problems (as it was perceived in 1999) to a real part of operations. Today's thinking is that embedding Web technology into every business group is the best way to deliver the most impact at the least cost.
"We're getting a sense that the pendulum is swinging back," said Joy Marshall, a senior vice president and a business segments director for Wachovia Corp.'s e-commerce division in Charlotte. She called the current stage in online technology the era of integration.
Ms. Marshall and other speakers - from Bank One Corp., J.P. Morgan Chase & Co., FleetBoston Financial Corp., and Bank of Montreal - all said that though they feel this type of integration is vital, they also support the practice of consolidating the management of online operations into a centralized unit. In years past it was felt that business units should manage their own Web operations independently.
At Bank One, for example, chief information officer Austin A. Adams said he had created a single Internet unit responsible for delivering all the technology projects within the Chicago company, instead of allowing each of more than two dozen business units to retain their own technology teams. His speech Sunday night at the conference - which is sponsored by American Banker's publisher, Thomson Media - opened the event.
Ms. Marshall said in her presentation Monday that she took a similar approach at Wachovia but that her model was slightly different in that it allowed each group to determine many of its own technology specifics, such as product pricing and functionality. "They decide the primary features they need, and then we" - the e-commerce division -- "make it happen. We are a business enabler."
Lloyd Darlington, the president and chief executive officer of Bank of Montreal's technology and solutions group, said that in the past each business unit handled its own information technology budgets but that now the company is putting all of this under his department. The change should result in a 15% to 20% reduction in IT expenses, he said.
Bank of Montreal "is no longer investing in IT that responds to the needs simply of one particular line of business, or delivery channel, or pool of customers, or geographical segment," Mr. Darlington said. "We look for opportunities to leverage the technologies implemented in one part of the bank so it can be used in other parts."
George Tubin, a senior analyst with the research firm TowerGroup of Needham, Mass., observed that many large banks centralized Internet units during the heady days of the dot-com era. These units often seemed to function independently.
By 2000 the trend was to distribute Internet operations throughout the separate areas of the bank, as each unit tried to reach its customers through the Web.
Now the centralized technology unit has indeed swung back into vogue, Mr. Tubin said. The difference is that instead of putting it above the other units and giving the Internet groups free rein, they are now placed below the separate business units and assigned to support them. "This is a good time for financial institutions to start to centralize their technology," Mr. Tubin said, "but they have to keep in mind that the customer experience has to drive their decisions."
