Technology makes money, finally

Vermont Business Magazine, Jan 01, 1996 by Sopper, Frank, Andrews, Richard

Floyd, a veteran of more than 1,000 bank restructurings, doesn't sound like someone who loses sleep over negative reactions. His biggest resistance comes from people with a "titwwadi" attitude, he said. Floyd defines titwwadi as, "That is the way we've always done it." In 1996, Merchants will operate with half the number of staff. Those remaining will certainly do things differently.

Boutin said his goal is to cut the bank's operating costs by one-third. The resulting operation will bear little resemblance to its former self. He may even abandon the bank's landmark, marble-faced headquarters in Burlington. Boutin said focus groups told him that the bank's customers had changed. To him, that meant the bank must change. Floyd calls the process "re-engineering."

"By next year," said Boutin, "the bank will be completely redesigned. The branches will look different. The people will be different. Their skills will be different. The technology will be different."

Floyd said the idea is to use technology to put all the resources of the bank at the service of the employee who makes the customer contact. In the organizational chart, the dreary people whose job it is to keep you from walking off with the bank's money in the form of loans you can't pay back, will be locked in back rooms out of the customers view.

Similarly, the operations and administrative staff, as well as the creators of products and services, will be tucked out of sight. At the same time, the customer services people will have unprecedented authority. Tellers will write loans, and issue credit cards. They'll be technologically linked to the credit department, and backed by the department's credit authority.

In addition, the bank's chain of command will be reorganized so the local branch's customer service people will report directly to the CEO. Currently, Floyd said, at a large bank, there can be as many as 10 layers of personnel between the customer and the CEO. So if you've just invented a board that allows you to surf grassy ski slopes in the summer time, you have a chance of getting around those baleful bean counters. Make no mistake. The bean counters will still be there. However, now they'll be watching the banks personnel who make the loans instead of watching the customer.

What Boutin and Floyd are trying to do is recreate the concept of a small-town personal banker backed by big bank technology and services.

Pruitt, at Banknorth, calls it "high-tech and high touch." Banknorth is about to introduce its own technology plan which will allow it to offer services similar to those Boutin and Floyd describe. The reason goes back to relevance.

VISITING YOUR BANK COULD INVOLVE AIR TRAVEL

During the bank consolidation days in the 1980s, a friend of mine in Massachusetts bought a house and took out a mortgage loan. Her mortgage bank was in California. Why not? It offered the lowest rate of interest and the postage to make her payment was the same to California as it was to a bank in her town. Around that same time, I moved to California, found her bank, and sent her a photo of it so she could see where her money went each month.