When Alan Buffington arrived at Shawmut National Corp. in 1993, the bank was still feeling the ill effects of the recession that gripped New England in the late 1980s.

With a host of financial troubles, including a bad loan portfolio of more than $1 billion, the bank was looking to keep spending in check in nearly every area - including Mr. Buffington's technology operation.

Now, the bank has placed many of its recession-based troubles behind it, but, like a child of the Depression, Mr. Buffington continues to watch his money carefully. Under his direction, technology spending at Shawmut will remain flat this year at $100 million.

However, this does not mean the bank will stand still technologically.

Though the $32 billion-asset bank, which has dual headquarters in Hartford, Conn., and Boston, does not carry a reputation for pioneering bank technology, it is working hard to make room in its budget for innovative products and services.

"We are clearly out of our retrenching mode," said the 49-year-old Mr. Buffington, whose official title is executive vice president of Shawmut's corporate services group.

"Now we are concentrating on spending and investing in technology wisely."

The effort has not gone unrecognized. Thomas Theurkauf, a securities analyst at Keefe, Bruyette & Woods Inc., attributes much of Shawmut's improving financial position to the bank's ability to effectively deploy technology.

"Shawmut has completely recovered from its asset quality problems and is now faced with a challenge to find avenues to pursue for revenue growth," he said.

"Now that the organization is back on track, the question is where will the profit come from, and management is still searching for the answers."

Mr. Buffington is one of the executives expected to help find the answers. Having a background in banking and insurance as well as with computer companies, he believes that the road to improving profitability begins with choosing technological investments carefully.

"We are trying to say we are not going to be all things to all people," said Mr. Buffington. "But that we are going to enhance our product offerings with technology so that we can build niches and relationships and add value to our customers so that we can be mutually profitable."

Since Mr. Buffington's appointment to the top technology position at Shawmut, the northeastern superregional has recommitted itself to projects which add to the convenience and the development of its retail customer relationships.

Recent examples of this effort include an upgrade to the bank's 24-hour telephone service line and the use of self-service kiosks that allow customers to see an on-screen images of the customer service representatives to whom they are speaking.

The bank began testing the video banking terminal - through which customers can open checking accounts, apply for loans, or invest in individual retirement accounts or certificates of deposits - late last year in Framingham, Mass. It plans to roll the terminal out to new locations later this year.

The phone banking service is being overhauled through a $20 million agreement Shawmut signed last spring AT&T. The system now allows customers to handle almost any transaction - including account openings, loan applications, or mutual fund account inquiries - via touch-tone phone.

Robert Hedges Jr., executive vice president for consumer banking, said the upgrade came in response to customer demand.

"Nearly one third of our customers prefer to be served outside of the traditional branch office," he said. "This segment of the customer base is growing. Since we created our phone banking center, customer usage has grown sevenfold."

The bank receives approximately one million calls a month to its 800 number, of which about 60% are handled by voice response systems. The remaining calls are handled by customer service representatives.

This voice-response usage compares favorably to that at Shawmut's peers - many of whom are operating more mature phone banking services.

For instance, Boston's BayBanks Inc., a pioneer in the field, off-loads about 40% of its 10 million monthly calls to voice response systems. Chemical Banking Corp. receives about 3 million calls per month, 80% of which are handled by voice-response technology.

Mr. Buffington said the telephone project has led Shawmut to consolidate many of its back-office data bases.

"The bank was faced with an interesting problem which led us to invest in the phone system," said Mr. Buffington."We had a number of disparate systems that needed to be integrated into one uniform platform."

Another technology project at Shawmut is the recent introduction of check imaging to enhance the bank's commercial "positive pay" product. Positive pay is a fraud prevention service in which cash management customers provide the bank with lists of checks it can expect to be drawn against a customer's account.

When items not appearing on this list are presented for payment, Shawmut will send an electronic image of the check to the customer for verification of the item's authenticity.

Customers are able to make a decision regarding payment of the item without talking to a bank official because the product is offered on-line. Shawmut images about 200,000 items a day for this service.

"Once a customer gets a list of checks and makes a decision on the items all they have to do is click on the item and the system will clear the check," said Mr. Buffington.

Looking to the future, Mr. Buffington said Shawmut will soon unveil an image statement product for retail customers. It also intends to upgrade its corporate services with Shawmut Window, a system that gives corporate customers direct access to the bank's corporate services via a personal computer.

"Although our technology budget has remained constant for the last few years, the real difference is that the spending is under better control," said Mr. Buffington.

"Throughout the end of 1980s and the early part of the 1990s, the bank focused on strengthening its organization without aggressively pursuing new technology."

Though many other institutions use the technologies employed by Shawmut, Mr. Buffington nonetheless believes the quality of the bank's services differentiates it from competitors.

By sticking with this strategy, he is hopeful that the bank can continue to improve its technology focus without significantly expanding its budget.

"We are trying to add value where others can't yet," said Mr. Buffington.

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