Bucking the trend toward outsourcing data operations, Citizens Banking Corp. has been "insourcing" in the first phase of a back-office consolidation of its five community banks.
A $2.5 billion-asset holding company based in Flint, Mich., Citizens runs affiliate banks in the Great Lakes State and Illinois.
Before the consolidation, each unit had its own product offering, processing centers, and application software.
Citizens' plan is to consolidate all data processing operations in Flint and to work out of a leaner, Standardized operations facility using the holding company's existing infrastructure.
"Our goal is to simplify processes and create commonality among our banks to be in a position to deliver better products and services," said Charles R. Weeks, president and chief executive officer of Citizens Banking.
"At the same time, we want to retrain the character of a community bank in the areas where we do business."
Started in November
Citizens began working on the conversion plan in November and expects to have all five banks switched over by October.
The first phase of the plan, completed over Memorial Day weekend, involved converting Commercial National Bank in Berwyn, Ill., to use Citizens' data processing center, which runs banking software from Hogan Systems Inc., Dallas.
Commercial National, a $280 million-asset bank, had been outsourcing its data processing function to EDS.
Reversing or taking back an outsourcing relationship has become known, somewhat predictably, as "insourcing."
"Citizens' affiliates each had different product sets and operational systems. Insourcing where needed an then re-engineering the operational processes allows them to achieve some of the efficiencies traditionally associated with outsourcing," said Paul Iven, a director at Moskowitz & Co., a St. Louis based consulting firm that is working with Citizens.
No Layoffs Now
One of the benefits traditionally associated with the streamlining of operations is cost savings through staff reduction.
Because Citizens' affiliates are community banks with strong ties to their locales, senior management decided not to immediately cut staff.
"We're anticipating savings in reduced processing costs, not in staff reductions," explained David A. Thomas Jr., president and chief executive of Citizens Commercial and Savings Bank, the lead bank of Citizens Banking Corp.
"Our people are our best resource, and we find it more productive for individuals and for our company to retrain [them] for other positions."
Mr. Thomas said that any staff reductions resulting from the consolidation will come through attrition.
Getting Out the Word
"In February, we held extensive meetings with [affiliate executives] and sequestered ourselves to be certain that there was agreement with regards to our goals," said Les Starr, vice president of information services at Citizens Bank.
In addition to high-level meetings, Mr. Starr and his staff worked to acquaint line personnel with the new Hogan software.
"People are naturally reluctant to change. By preparing for change responsibility and getting people from across the bank involved, we were able to build more cohesiveness among our employees," said Mr. Weeks.
Ms. Sullivan is a Freelance writer based in New York.
