The people behind the technology strategies of what may be banking's most rousing rivalry-the one between the titans of Charlotte, N.C.-have a basic belief in common.

Common systems, that is.

NationsBank Corp. and First Union Corp. have been praised by analysts and admired by competitors for their competency in completing mergers and the subsequent system integrations.

Laboring in the background, with far lower profiles than chief executive officers Hugh L. McColl Jr. of NationsBank and Edward E. Crutchfield of First Union, are technology chiefs James D. Dixon and Austin A. Adams.

They and their management teams made fateful decisions years ago to unify their computer systems in a way that would accommodate growth of all kinds, internal and by acquisition.

Without that, First Union would have had a hard time growing in 10 years from $28 billion to $229 billion of assets. NationsBank started at $29 billion, has grown to $310 billion, and would probably not be in position to merge with $264 billion-asset BankAmerica Corp. without that technology foundation.

"NationsBank must be one of the best organized banks in the world," marveled Seamus McMahon, executive vice president of First Manhattan Consulting Group in New York.

First Union is equally admired. "First Union has had the most consistently well-executed acquisition history," said William Bradway, research director of Meridien Research Inc. in Needham, Mass.

"You have two highly competitive, highly profitable, and conservatively managed companies that have been quick to identify and borrow best practices," even from each other, said Carla D'Arista of Friedman, Billings, Ramsey & Co., Arlington, Va.

And both banking companies are on unfinished missions.

NationsBank is completing its integration of Barnett Banks Inc., which will be an appetizer compared to BankAmerica. First Union is busy digesting its recent CoreStates Financial Corp. and Money Store acquisitions.

First Union was the first to realize that it would require a system that could, in technology parlance, "scale." The effort to build the Emerald deposit system, the first of what First Union calls its "single systems" approach to merger integration, began in 1985 and stemmed from a suggestion by John Georgius, now the company's president.

By logical progression from there, "we have one general ledger, one consumer deposit, and one loan system," said Mr. Adams, First Union's executive vice president of automation and operations.

"If a customer from Hartford, Conn., goes in to execute a transaction in Miami, that sales and service representative has the same information and the same ability to handle it as anyone in our 13 states," Mr. Adams said.

At NationsBank, everything is built around "model banking," which dates to the 1991 merger of the former NCNB Corp. with C&S/Sovran Corp. As the new NationsBank then hunted for a new computer system, its leadership decided to get one big enough to support several more mergers.

"One of the very first things Mr. McColl mentioned was the importance of building an infrastructure that would support the delivery of common products nationwide," said Mr. Dixon, president of NationsBanc Services Inc. "For a customer to have a common experience regardless of geography, you have to have a common platform-you couldn't integrate without doing that."

Both banks steered clear of pitting competing systems against each other-the "best of breed" approach that became discredited in deals like Bank of New York Co.'s with Irving Bank Corp. and Chemical Banking Corp.'s with Manufacturers Hanover Corp.

Debates and internal politics were found to bog down the integration process, Mr. McMahon said. "The best can be the enemy of the good."

By staying true to its own systems, First Union has achieved cost savings of 37% from in-market mergers and 16% from out-of-market deals, according to a 1997 research report from Salomon Brothers.

"First Union has had common systems across its network for many years," said Diane Glossman, now of Lehman Brothers, who co-authored the Salomon analysis. "The fact they can tell you cost savings down to the penny shows they have it down pat."

Common systems enabled First Union "to consolidate operations and data centers for all merged entities, abbreviate the schedule for branch consolidations," and get products to market quickly, Ms. Glossman said.

First Union also was able to accelerate post-merger processes. In 26 in- market acquisitions between 1991 and 1996, the average transition took 2.9 months. One bank was converted in a single day.

More than 450 branches in Florida were converted over a single weekend in 1994, an event that First Union officials call "the largest systems conversion in U.S. banking history."

"There is no question that our speed of integration and skill of integration-and the extent to which we can help the company grow-depend upon maintaining a single application system," said Mr. Adams.

"I don't know anyone that isn't speaking now of having a single system," he added. "But it is a matter of record that Banc One Corp. has 12 deposit systems, and the bank down the street (NationsBank) has four or five deposit systems," even before considering Bank of America's additional systems."

NationsBank officials acknowledge that drawback, but they also claim an advantage. "An architecture that you can change without impacting the entire system," said Janey Place, director of NationsBank's strategic technology group.

"NationsBank would like to say that it has common systems," said Ms. Glossman of Lehman Brothers, "but First Union got there years ahead of NationsBank."

NationsBank stresses how its system allows it to offer a common set of products across the country.

Harris A. Rainey, NationsBank's director of merger integration, goes so far as to say that model banking "is not about systems, it is how we go about delivering products."

Model banking's true value is said to be less based on unified systems than on selling.

"Model banking really reflects how technology is integrated into incentive and targeted marketing," said George Bicher, an analyst with BT Alex. Brown. "It offers tools for targeted marketing by creating incentives for sales."

First Union has countered model banking with its own "future bank" initiative. Similarly, it is an attempt to invigorate the sales process in branches by eliminating administrative roadblocks.

Mr. Adams' division is now pushing 1,200 administrative and operational tasks out of the branches and into data centers so that branch personnel can focus on selling.

Redesigned branches-renamed "financial centers"- include a concierge- like "customer relations manager" who greets visitors and directs them to the appropriate location.

Consumers are often encouraged to step into a converted office and use a telephone to ring First Union Direct, the remote call center. The bank expects to have all its 2,400 branches upgraded by the end of the year.

Mr. Bicher said First Union may be "beating the drum a little too much" in technological self-congratulation. "It is a shame when they hold up the future bank initiative as revolutionary. It is where everyone will be going."

But Mr. Adams claims there is a big payoff in the new way of branch banking. "Our conversion of Signet Bank (of Virginia) in March of this year was aided by the fact that branch personnel no longer had to deal with operational functions and could focus on serving the customers," Mr. Adams said.

First Union is finding benefits in common systems that extend beyond merger integrations, such as in the year-2000 compliance area. Among the cost estimates disclosed for dealing with the programming glitch are $600 million at Citicorp, $380 million at BankAmerica, $300 million at Chase Manhattan Corp., and $120 million at NationsBank.

First Union has estimated a mere $64 million-$19 million of it dedicated to the CoreStates and Money Store systems it is taking on.

Mr. Adams said the year-2000 issue serves as "a proxy for nontechnical people about the technology philosophy of our institution."

A recent survey of the top 25 banks by PaineWebber Financial Services named First Union among four institutions most prepared for the millennium change. The others were Bank of New York Co., First Tennessee National Corp., and State Street Corp.

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