Bipin C. Shah, Mellon Bank Corp.'s new technology chief, has quickly reorganized dataprocessing and operations units to speed product development and reduce reliance on mainframe computers.

The reorganization, announced internally in late April, affected nearly all 4,000 employees of the technology products and services division.

Some observers said the changes were essential at a time when the bank has reached a crossroads with aging technology and the need for longer-term product strategy.

Mellon is one of the top fee generators in the country, with over 40% of total revenue from noninterest income. For example, it is one of the top five trust banks, and trust generates the biggest proportion of its non-interest income.

Shifting Responsibilities

Mr. Shah heads two product areas that account for another big chunk of revenue - cash management and data-processing services.

According to James Hanbury, an analyst with Wertheim Schroder, Mellon earned $150 million in cash management and $90 million from its data processing business in 1991.

Under the reorganization, the responsibilities of all the units under Mr. Shah's leadership were changed, except for network services. Headed by Janet Hartung, network services runs automated teller machine operations and sales, the merchant payment program, and support services.

Cash management formerly included both technical and marketing functions. The realigned unit focuses on sales, marketing, product management, and client support. The new global cash management units is headed by R.W. Stasik.

David Johns, the executive vice president formerly in charge of global cash management, now heads a unit devoted to market research and new-product development in cash management and other areas.

Two new positions are unfilled: head of systems development, responsible for new systems supporting payments systems, wholesale banking, EFT, and finance; and information processing, responsible for running the data center.

Looking Further Ahead

The reorganization "allows me to work with each manager to make sure there's an emphasis on long-term planning, Mr. Shah said. "Before, in the technology products and services divison, they worried more about meeting this year's plan and less about what was happening three to five years ahead."

The moves have "brought technical and product staff much closer together, which we hope will help the organization to react more quickly to market demands," said Martin J. Lippert, first vice president and head of the bank's technology planning and internal controls unit.

Mr. Lippert's mandate is to shift the bank from a mainframe focus to one based more on networks of powerful mini- and microcomputers.

"It gives us [the ability] to look at technology from across multiple platforms and see how we can move away from mainframes," Mr. Lippert said.

Aiming for Savings

The bank would like to explore new desktop workstation technologies that could provide similar power to an IBM mainframe for about 51% of the cost, he said.

"We're putting in a more concerted attempt to define where we're going with Mellon applications, a number of which are beginning to age, and we'll have to take some action," Mr. Lippert said.

Mr. Shah took over as executive vice president of technology products and services unit in February. Earlier, he was tech chief at CoreStates Financial Corp., where he was said to favor more emphasis on the fee businesses than other top executives. Mr. Shah left CoreStates abruptly in February 1991.

Mellon's previous technology chief, George DiNardo, also left abruptly in January 1991. Thoughout the 1980s, Mr. DiNardo was an outspoken advocate for centralized, mainframe-based information systems.

Mr. Shah is expected to emphasize the network services business - an area he built up from scratch at CoreStates through the MAC shared network. While Mellon does not run a brand-name shared network, it is the No. 3 U.S. provider of third-party ATM switching, processing ATM transactions for 350 to 400 financial institutions.

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