Headlines:
Sovereign Installs Compliance Software
To protect itself from the burgeoning array of state predatory-lending laws, Sovereign Bank of Philadelphia is using software to analyze loans that it buys from others.
The $41.5 billion-asset subsidiary of Sovereign Bancorp Inc. has been using PredatorAnalyzer for about 30 days to perform automated compliance audits, said Harrison F. Hazard, the compliance manager of its national correspondent lending group.
Sovereign accesses the software online, where it is hosted by the ComplianceEase unit of LogicEase Solutions Inc. in San Francisco. The bank tested the software for two months before installing it.
"Each state comes up with its own unique twist, so that you have to do special monitoring. It's a nightmare," Mr. Hazard said in an interview Sept. 24.
Each year Sovereign buys $1.8 billion of loans, mostly second mortgages, from 200 correspondent lenders in 45 states.
PredatorAnalyzer reviews a loan's interest rate, points, fees, penalties, the type of license held by the lender that originated it, and the state or federal laws that apply to it.
Sovereign has been using PredatorAnalyzer so far only to test about 10% of its loans manually after buying them, though the software can analyze each loan automatically before it is bought.
"We didn't take the full bite of the apple," Mr. Hazard said.
Though he acknowledged that "anything can happen," he also said his bank did not encounter any compliance issues before the software was installed. "We're trying to take the preventive approach here. We have particular credit guidelines that we require the correspondent to adhere to."
By the first quarter Sovereign hopes to be using the software to analyze loans before they are purchased, he said. "Ultimately, we want to move this to real time, to the front end of the business." 
Citizens Analyzing Internet Sessions
Citizens Financial Group Inc. of Providence, R.I., is using software to gain insight into the Internet experience it provides and to fix problems that customers and employees encounter.
For the last six to eight months the $71 billion-asset unit of Royal Bank of Scotland Group PLC has used RealiTea from TeaLeaf Technology Inc. of San Francisco to monitor both online customer sessions and employees' growing use of Web-based programs.
William K. Wray, an executive vice president and the chief information officer at Citizens, said the growing complexity of banking systems - with legacy applications linked to Internet front-end software - creates new challenges for technology managers.
"We're not technology driven. We're customer driven," Mr. Wray said in an interview Sept. 25. "Your classic methods of knowing whether something is working don't necessarily work in the very complex Web environment. All the lights may be green, and yet your customers may be banging their fists in frustration."
Using RealiTea's statistical reports, Citizens found that of the 500,000 user sessions that occur in an average business week, 84 fail for reasons that the system can identify. "You use that for tuning and diagnostics," he said.
Though the software enables a site operator to track each session screen by screen and click by click, Citizens retains only statistics like the user's name and the reason for a failure, not actual screen images or other things that could be used to reconstruct an entire user session. "You don't want to have the equivalent of a keystroke logger," Mr. Wray said, citing concerns about customer privacy.
Citizens also is using RealiTea internally, he said. It is now installing Internet-based software for its tellers, branches, and call centers, and it is using RealiTea to check the performance of these programs.
