The undisputed father of reengineering claimed to know why commercial bankers have been slow to adopt one of the most widely discussed management tools in recent years.

"Process is foreign to the leadership of banks," said consultant Michael Hammer, holding court at a conference on the subject last week before dozens of bankers and other financial services professionals. "Senior management at banks are front office guys who hate the back office."

The author of the celebrated "Reengineering the Corporation" argued that insurance companies are much further along in transforming their businesses, because of a greater willingness to systematically address organizational problems. Banks, by contrast, tend to be run by executives who look outward, waiting for the next acquisition to solve problems.

"It's 'let's make a deal,'" he said.

But though the industry may lag in reengineering - defined by Mr. Hammer as "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance" - several banks have taken giant leaps, he said.

Top executives with several banks, including Citicorp and First Chicago NBD Corp., were on hand to discuss how they transformed them.

Frank Woosley, the director of Deloitte & Touche's financial services consulting practice, argued that reengineering becomes important to banks faced with a pressing need to generate top-line growth without reliance on mergers.

The issue of internally generated growth has become paramount, he said, as shareholders penalize banks with price-to-earnings ratios of less than 15 because they don't "believe that banks can achieve sustained growth."

Mr. Woosley said his company's research shows a high correlation between shareholder value and revenue.

"A financial services company can't cost-reduce its way into long-term profits," he said.

As a result, he said, institutions should consider reengineering various processes - such as the way they acquire customers, design products, and identify needs - to generate consistent market-derived revenue growth.

Marion Foote, a senior vice president in charge of First Chicago's retail banking services group, gave a blow-by-blow account of her institution's controversial effort to overhaul its retail banking unit in order to encourage more profitable customer behavior.

While the effort succeeded in improving bank profitability, it also invited national headlines and scorn from consumer groups. The difficulties resulted from the bank's imposition of a $3 charge on customers who use a teller window for transactions that could be handled automatically.

Ms. Foote said when the fee was introduced she was fielding calls from press organizations all over the country. She even got a call from a Chinese radio journalist. "A year ago at this time, life was really interesting for us," she said.

Mr. Hammer praised First Chicago's retail transformation, calling it "one of the most audacious" examples of reengineering he had ever seen. "By charging people for coming into a branch, they really reinvented retail banking," he said.

Though it received far fewer headlines, Citicorp has also undergone a reengineering effort in its Latin America retail operations, which suffered from, among other things, duplication of efforts and a need for focus.

Alan J. Weber, Citicorp's executive vice president in charge of the Latin America consumer group, described how his unit developed reengineering teams that worked independently of day-to-day managers.

"We have proved to the country managers that we had competent people doing the reengineering and that the solutions were viable," he said.

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