PNC Financial Services Group’s e-commerce strategy began to crystallize early last year when the company put high-ranking executives in a room and forced them to imagine just how new technology could destroy each of their lines of business.

They left with a plan: Appoint an executive in each business line to work closely with, a centralized e-commerce group created about a year earlier.

Pittsburgh-based PNC is far from the only banking company to wrestle with structural changes as it explores electronic commerce. The choices boil down to isolating Internet activities in one new unit, having all business lines take part, or trying a combination approach.

PNC executives debated what new business possibilities were opening up, what the company had to do just to stay in the game, and how quickly it had to invest in change.

The exercise “sparked a lot of creative thinking in the way we do our business,” said Dick Lucas, director of e-business at PFPC, PNC’s mutual fund servicing company. “We were caused to look at the company, at how it could be destroyed, and that has made us look at things a lot differently.”

Ultimately, the group decided the best move would be for to act as an internal consulting group, assessing the units’ needs and then coordinating the technology investments needed to meet those needs. It also seeks to assess changes in the marketplace that might affect PNC’s ability to compete.

“We seek to leverage technology across all businesses, and if we can do that effectively, the total is greater than the sum of the parts,” said Timothy Shack, the company’s chief information officer.

Ron Shevlin, research director of online financial services at Forrester Research Inc., a technology change consulting firm in Cambridge, Mass., is impressed.

“Of all the banks that I talk to, I think they are one of the smartest banks around,” he said. “Whatever they are doing, they are doing it right — time and time again.”

Forrester has recommended that banks form a centralized group along the lines of to work with the business units, as well as a separate group that would seek to create new businesses based on the Internet. “If you keep new technology within the business units, it will get buried,” Mr. Shevlin said.

But though PNC has not formed the separate group, its strategy seems to be working, he said.

Mr. Shack said James E. Rohr, PNC’s president and chief executive officer, is the force behind the central e-commerce group. “He is technology-committed,” Mr. Shack said. is composed of about 20 people from various banking and technology backgrounds. They work a few blocks from PNC’s main Pittsburgh campus in an office that looks like a dot-com loft in Silicon Valley. The open-plan, 17,000-square-foot complex, called TechWorks, is designed to encourage “incubation and thinking outside of the box,” Mr. Shack said.

Tom Kunz, director of e-business, oversees and acts as the company’s liaison to the leaders of the business units.

Rather than make a variety of investments in technology and hope that some of them pan out, PNC is concentrating on “a series of focused bets that we believe will make value,” Mr. Kunz said. In general, he said, the company wants to see spending on productivity improvements to result in cost savings, and spending on customer service to bring more cross-selling and customer acquisition.

Long-term investments “are timed to be slightly ahead of customers’ pace,” but ultimately all of them have to answer to the bank’s balance sheet, he said.

Martin Evancoe, Francine Miltenberger, and Mr. Lucas are among the executives Mr. Kunz has been working with more closely since PNC began intertwining the goals of with those of the business units. The three executives discussed how the closer alignment has changed their jobs.

Before, Mr. Evancoe, director of e-business for PNC Bank, was the manager of electronic banking, a category that lumped online banking together with automated teller machines and debit cards. Now Mr. Evancoe works only on improving PNC’s online banking service.“We made a serious commitment to what we take seriously,” Mr. Evancoe said. “Online banking was here and it was ready for prime time.”

His group’s biggest success has been in bringing the online banking platform in-house, after having run it on the now-defunct Integrion platform through an outsourcing arrangement, Mr. Evancoe said. Online banking now runs on software that integrates ATMs, the call center, and the Web so that customers have consistency no matter how they access the bank, Mr. Evancoe said.

The Web site also has evolved from one that offered read-only information to one that offers bill payment, loan applications, and other standard online banking applications. About 23% of PNC’s deposit customers access their accounts through the Internet, but given that an estimated 50% of its customers have Web access, “we still have some room to penetrate,” Mr. Evancoe said.

He said that he expects closer alignment with will help with that. “The focus that all of the lines of business have taken has made my life easier,” he said. “I now have colleagues who have the same accountabilities to the consumer bank, and people are working together.”

The treasury management unit depended on the Internet long before was born. The difference now is the better coordination.

“All of us were exploring how the Internet can impact or enhance our respective businesses, but we were focusing in different directions,” said Ms. Miltenberger, division executive of PNC treasury management. “It became clear that we needed to form a group to help centralize the applications.”

The group’s highest-profile project has been the formation of BillingZone, a joint venture of PNC and Perot Systems Corp. of Dallas that supports the delivery and payment of electronic bills between businesses. The service was pioneered with Xerox in 1997 and launched in 2000.

“Our focus on the Internet is a natural outgrowth of what corporations are doing to change their business over from a traditional methodology to a digital age,” Ms. Miltenberger said.

The treasury group also is using electronic commerce to cut its own operational costs. About 4,000 of PNC’s 30,000 treasury management customers use the bank’s new “Internet service center” to get answers to customer service questions.

“We realize that fully 80% of things our clients are calling us for we could convert to self-help on the Web and make it easier on us to provide a higher level of service,” Ms. Miltenberger said.

Even though Mr. Lucas’ PFPC mutual fund servicing group has been focusing on the Internet for three or four years, the formation of has been beneficial by encouraging “a lot of intercompany support so that different businesses within PNC have become well-coordinated with the Internet,” Mr. Lucas said.

The 5,000-employee group acts as a transfer agency for mutual funds, touching about 80% of the funds in the country. “In a perfect world we would dream of making PFPC a virtual extension of our clients’ business by providing unbranded service,” Mr. Lucas said.

One of PFPC’s major accomplishments has been an investment in a consortium with Putnam Investments and Fidelity Investments to provide a neutral portal for trade inquiries and information about all investment products, Mr. Lucas said.

Through, “We are getting the message out to the organization to think on a daily basis about this new ability to communicate and move data quickly and economically,” Mr. Lucas said.

Improved communication across the bank may be one of’s biggest contributions. “Different businesses are at different levels of maturity, and by creating a centralized e-business function we were able to bring best practices for each business to a centralized platform,” Mr. Shack said. “It has allowed our businesses to ramp up at a more accelerated pace.”

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