In recent months, executives at IBJ Schroder Bank and Trust Co. in New York have been working to reposition the $4.6 billion-asset institution in the marketplace.

The bank, owned by Industrial Bank of Japan, has placed a new focus on lending, trust, and cash management services to its middle-market corporate and institutional customers. The new emphasis is being touted with an aggressive print media and direct mail campaign.

"We are making an effort to go public and position ourselves as a fairly unique bank," said Dennis Buchert, executive vice president and chief banking officer. "We are focusing on the market in a clearly defined strategy where everything clients are looking for can be found in our products."

But as the bank, which British-based Schroders PLC sold to the Industrial Bank of Japan in 1985, charts its new strategy, executives say they are able to do so in part because of major technology initiatives undertaken in recent years.

Five years ago, for example, IBJ Schroder installed a system enabling it to handle a greater volume of electronic funds transfer transactions. The goal was to reduce both the number of errors in the operation and the size of the staff needed to run it.

"The whole idea behind installing the system was to allow it to meet our existing needs but also offer the flexibility to change as needs change," said John Banno, senior vice president.

The bank purchased a system from Comtex Information Systems, the New York vendor it had worked with for a decade in developing a cash management operation.

"When we looked at what was available, the only one that met our needs was a system called Accutran" from Comtex, said Mr. Bano.

Each month, the bank initiates 18,537 book transfers and check payments through the Fed Wire and the Clearing House Interbank Payment System, or Chips, and receives about 15,814 such transactions.

Since the system was installed, the bank has been able to reduce costs significantly. The biggest savings: the department's staff has been cut in half.

The reason the system has been so effective is because it has allowed IBJ Schroder to increase the number of straight-through transactions - in which customers send information to the bank electronically and the transaction is executed automatically.

"When we first started using the system, approximately 10% of our transactions were straight-throughs," said Mr. Banno. "Now the number has increased to 92%."

Mr. Banno said the remaining transactions cannot be handled electronically because many of them are internal or for private banking clients who do not have the ability to enter the information directly into the system.

"Almost all of our customers are linked to Swift or are linked to our Treasury Connector product to electronically send in the information for the transaction. But for those who are not, we must enter the transactions by hand," Mr. Banno said.

Automating the system has also resulted in a significant reduction in errors. "An error occurs when a transaction is not executed properly or it is sent to the wrong bank or has the wrong dollar amount," Mr. Banno said. "By using the Comtex system, the bank has been able to keep its error rate at approximately four per month."

"Not only are we saving money by reducing staff, but we are also saving because we have been able to reduce errors (and thus) pay less out-of- pocket costs."

David Medeiros, a technology analyst with the Tower Group in Wellesley, Mass., said the automation of the funds transfer business significantly reduces the costs of processing.

"By using technology, banks are able to have the bulk of the transactions handled by computer which improves the quality and service the institution can offer to customers," he said. "It is the future of the industry, because it reduces costs while improving everything else.

The system also has the ability to execute any action that the transaction requires, such as sending a fax, memo, or telex that a customer may require.

Comtex has developed the system so that the bank can also manage its entire Federal Reserve Bank position on Accutran.

"The module has been customized so that we can use the system for funds control in a real-time, on-line environment," said Mr. Banno. "The system has saved a lot of money and has made both the cash management and the dollar clearing products very, very profitable to the organization."

Once a transaction is received in the system, checks are made for authenticity and whether balances are in place to handle it.

To encourage customers to present transaction instructions electronically, IBJ Schroder charges a higher rate for those who provide the information verbally.

"There is a clear benefit for customers and to us when we work together electronically," said Mr. Banno. "The customer gets a lower transaction cost and we get more efficiencies, allowing us to maintain a decent profit margin."

Although the system is five years old, the bank has been able to adapt it to keep up with regulatory changes and provide better customer information as well as information on the bank's own position to avoid overdraft or debit cap problems.

"We know what it takes to be competitive and we know what is needed to continue to make the operation more efficient," said Mr. Banno. "By using technology we are able to meet and exceed our goals and continue to make the operation more profitable."

The improvements in the operation also fit in with the bank's larger plans.

"We are not trying to be everything to everybody," said Mr. Buchert. "Our goal and strategy is to position ourselves as an institution that offers a specific niche of products and services to companies within the $20 million to $500 million range.

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