FleetBoston Financial Corp., which has struggled for a year with customer service and employee morale issues, claims to be putting acquisitions on the sidelines to focus on improving its image.
The change comes amid an economic slowdown that seems destined to dampen revenue growth at Fleet and most other banking companies, and as Fleet prepares to assimilate the operations of its most recent conquest, Summit Bancorp of Princeton, N.J.
The rapid series of mergers and integrations that Fleet used to build itself into a $211 billion-asset company also put it under a service spotlight, particularly with respect to the customers acquired or divested because of those deals.
In one highly publicized example from last year, Fleet got grief when it tried to turn away customers whose accounts were part of a divestiture of deposits and branches to Sovereign Bancorp. Fleet quickly relented, but service issues, such as sporadic long waits on the phone, have persisted and have been enough of a headache to make senior executives take notice.
I do think there have been customer experience issues at our company, said Charles K. Gifford, president and chief operating officer of Fleet, at a conference in California Tuesday. Weve got lousy stories on customer attrition, customer satisfaction, employee favorability, employee turnover. We have specific goals to address each one of these things.
Those goals, which include improving cross-selling statistics, are to be finalized by the end of the week, Mr. Gifford said at the Morgan Stanley Dean Witter financial services conference in Laguna Niguel. And there will be consequences. This year its going to be part of compensation, its going to be part of who gets what job, its going to be a real driver, he said.
Even as he adopts the get-tough attitude, Mr. Gifford pinned part of the blame for the problems on more than 10 years of acquisitions, which forced employees to devote more of their time to internal operational and political matters instead of service. The company said it is putting a halt to that for now.
In terms of deals, we dont need to do a darn thing, Mr. Gifford said. We dont plan anything major.
This is really the first time that weve taken mergers off our screen and really have focused on the customer, said Fleets chief financial officer, Eugene McQuade, who also participated in the presentation.
Fleet has said as much in the past. In May 1997, for example, then CEO Robert J. Higgins told American Banker that the company was emerging from an acquisition streak and would concentrate on boosting revenues and customer service. At the time, Fleet had just purchased Hartford, Conn.s Shawmut National Corp. and the New Jersey operations of National Westminster Bank PLC.
Just months later it embarked on a new buying spree, beginning with Quick & Reilly Group and ending in 1999 with the deal for BankBoston Corp.
Analysts said they think Fleet is serious about not doing more acquisitions. It is about to switch chief executives: Terrence Murray, who made his entire professional reputation by being an aggressive acquirer, will relinquish that title to Mr. Gifford at the beginning of next year.
Chad [Gifford] will be more about internal growth and trying to get that story out, said George Bicher, an analyst at Deutsche Banc Alex. Brown.
Mr. Gifford and Mr. McQuade said the company will improve service by focusing on existing customers and improving cross-selling ratios. For example, only 12% of deposit customers have Fleet credit cards, and the company wants to increase that to 20% by the end of the year. We are so under-cross-sold, Mr. Gifford said.