As the lines blur between the needs of institutional investors and individual high-net-worth portfolios, so do the retail and commercial distinctions for Pittsburgh-based Mellon Financial.
Mellon in June announced it will be consolidating its varied online banking systems in retail, small business and asset management onto a single platform through new hosted, on-demand ACI Worldwide software from Transaction Systems Architects. The changeover comes near the close of Mellon's $16.5 billion merger/integration into Bank of New York and its national banking expansion that bank officials believe needs a standardized delivery and look for private-wealth, cash-management and family-office markets.
For the vendor, which is changing its name to ACI, it represents a showcase for a new ASP strategy for online delivery of an enterprise-banking platform, built primarily from its 2006 $150-million acquisition of online business banking firm P&H Systems.
Mellon's use of Enterprise Banker, which ACI formally launched in February, will be integrated with the company's upcoming business banking portal that will give Mellon clients a single sign-on for both their business and personal accounts. The platform consolidation covers Mellon's United National Bank subsidiary in Florida; its 1st Business Bank unit in California; and the $2 million-and-up high rollers within the national private wealth management group. "What we want to do," says Tim Tully, COO of the private wealth group, "is bring all these different types of banking customers together so we can have a more national banking perspective."
Mellon is the first announced customer for Enterprise Banker, which combines the P&H cash management model with the international back-end payments experience of ACI. ACI bought P&H because "we wanted to get into the ASP side of the business to go downstream somewhat," says ACI president Philip G. Heasley, a former executive with U.S. Bancorp and then-Bank One subsidiary First USA.
That's why Aite Group research director Christine Barry was surprised to see Mellon, which with BoNY is expected to have $16.6 trillion in assets under management with $12 billion in annual revenue, on the Enterprise Banker customer list. "The fact they were able to get such a large bank really proves the scalability of this product offering," Barry says, citing ACI as the first cash management vendor to offer retail banking, small business banking and corporate cash management in a single product.
Tully wouldn't comment on BoNY integration issues (taking place through 2008), other than "you can imagine how expensive it can get to maintain three or more different types of...back-office systems like cash management, online banking, teller transactions, teller capabilities, credit and deposit services...[BoNY's] challenges are similar to ours."
TowerGroup wholesale banking research director Susan Feinberg says the Mellon platform combo isn't entirely unique, but likely won't be replicated by large retail national banks. "I think there are certain kinds of niche banks where this makes a lot of sense," she says.
