The data processing subsidiary of Huntington Bancshares Inc. and Bisys Inc., a computer services vendor, have established a forum to help bankers evaluate the pros and cons of outsourcing.
Called the Bank Outsourcing Alliance, it will conduct quarterly meetings for representatives of 25 banking organizations and five computer vendors to exchange views on financial and operational effects of farming out data systems and operations.
Participants have yet to be announced. The alliance will be based in Melrose, Mass., and organizational meetings are set for November.
Outsourcing has become one of the hottest topics in banking in recent years. Though smaller banks have long depended on outside service companies for processing support, the trend has recently spread to large regional and superregional banks that historically controlled their own data centers. Even some money-center banks are considering outside servicers.
$1 Billion-Asset Banks Targeted
The alliance will focus on banks with more than $1 billion in assets. "LArger banks have just been waking up to the possibility of having someone else do their dirty work for them," said Richard M. Sullivan, its fulltime executive director. "The meetings will give them a forum to have their questions answered" and discuss issues that otherwise might not have occurred to the participants.
The quarterly meetings will last about a day, with speakers from consulting firms and academia giving presentations on the effect of outsourcing on a bank's operations, personnel, income, and balance sheet.
The presentations will include case histories and device on how to negotiate for services.
Fodder for reports
Annual dues will be $15,000, which includes attendance at each session. Members will receive a report summarizing the contents of each meeting.
"We have outsourced a number of our operations, including credit card and mortgage processing, but we still feel we've can learn a lot from an industry-specific forum like this," said David P. Liebchen, a vice president at Huntington Service Co., the subsidiary of Columbus, Ohio-based Huntington Bancshares.
The $12 billion-asset Huntington could stand to gain from serving as sponsor. It is one of handful of banks currently testing image-based check processing systems from unisys Corp., Blue Bell, Pa. Mr. Liebchen said Huntington is interested in selling check processing services to other financial institutions when the system is up to speed.
Huntington's partner, Bisys, formerly a unit of Automatic Data Processing Inc., is owned by the New York investment firm Welsh, Carson, Anderson, & Stowe. houston-based Bisys provides computer support to 300 financial institutions.
Mr. Sullivan was a banker for more than 30 years. He held product management and programming positions at Shawmut National Corp. and the Federal Reserve Bank of Boston.