Beset by overbuilding and bad commercial loans, South Florida was one of the regions hardest hit by the financial crisis. As Miami-based City National Bank charts its recovery via product diversification, the bank is also beefing up its technology capabilities to handle a broader loan set and added reporting requirements, while gaining extra efficiencies via a reduction in paper-laden processing.
"There's been a lot of turmoil with the banking scene down here, with several banks failing or being taken over," says Tim Robinson, director of operations and technology for the $3.8 billion-asset City National, which operates in an area stretching from Miami to Orlando.
The bank, which suffered losses from exposure to commercial loans during the financial crisis, has since embarked on a diversification strategy in which it is evolving into a full retail bank focused on residential, commercial and private banking. The transition requires a major technology overhaul to handle diversified processing and reporting needs.
City National, which was acquired in 2008 by Caja Madrid, Spain's third largest bank, has fared better than many banks in Florida – for instance,
An OCC order from 2010 said the bank should review its balance sheet to reduce the risks associated with its concentration in land, development and construction loans. At the time, the bank said it would not halt commercial real estate lending, but would focus on retail lending. It noted that Caja Madrid was a large retail bank in Spain that
Robinson, who joined the bank in Feb of 2008, says the bank had plans to expand into retail before the Caja Madrid acquisition. The bank’s current CEO, Jorge Gonzalez, joined City National in Jan 2009 and has continued with the expansion and diversification plans. Robinson said the OCC “also recognized” that we had a concentration in CRE loans and indicated that we needed to diversify our loan portfolio.
The diversification seems to be paying off. City National recently announced 2011 third quarter income of $8.5 million and core earnings of $15.8 million, and it has grown its asset size by more than $1 billion in the past year.
The expansion would not be possible without a cross-enterprise tech upgrade that allows easier onboarding of new accounts, more detailed reporting and easier processing.
"We needed to assist our branches and give our retail and commercial bankers a means to mange prospects and customers from a contact, pipeline and product offering perspective," Robinson says.
Part of the overhaul is moving processing in-house — the bank is migrating from an outsourced platform from Metavante/FIS to internal processing using licensed software from Fiserv to deploy Premier and other products (FIS did not return a request for comment).
Robinson says the legacy outsourced system was limited in terms of data access, and the bank's loan expansion required access to more granular information. For example, the bank's expanded lending options require monthly economic and GAAP reports for risk management purposes, broken down by business line and branch level.
"We're in a market rebound mode here, we need to get information when we need it and analyze it 50 different ways and be able to control what we do with our own data," Robinson says.
The bank is using Business Process Manager for Premier, an account and process management system that includes workflows that allow the bank to capture and use customer information to simplify processes and eliminate paper flows between branches and the main office, as well as improve reporting capabilities. Another Fiserv product, EnAct, enables information gathering, automation and collaboration to manage product portfolios, sales teams and local markets.
City National hopes to save $1 million in IT costs from the tech project. While outsourcing is generally considered a cost-saver, Robinson says insourcing and increasing automation for reporting, onboarding and other processes will allow the bank to shave IT expense through added efficiencies and more internal control over deployment of tech resources.
He also says the existing IT staff possess the skills to manage the new tech platforms without added workload or added internal resources.
Robinson says the bank is hoping to further reduce paper use and speed onboarding by installing electronic signature pads at new account desks. "That will allow us to automate the flow of information from the beginning," Robinson says.
