Fueled by a growth-through-acquisition strategy, Sovereign Bancorp Inc. grew exponentially in the last 10 years. But the $35 billion financial services institutions growing pains were particularly acute in 1999, when it acquired 281 bank branches from the former BankBoston Corp.
In the struggle to absorb the new branches into its IT infrastructure, Sovereign, in partnership with the systems integration unit of Unisys Corp., developed a method for converting acquisitions quickly and efficiently. This method differentiates Sovereign from its competitors, said John McCarthy, chief technology officer at Sovereign.
“In the midst of this environment [of consolidation in the financial services industry], weve gotten acquisitions and mergers as a competency for this company. We can knock them out safely with no impact on the customer,” McCarthy said. “Once we have a commitment to the underlying technology, it doesnt become a question of whose system is better. Its an extension of the tried-and-true.”
When Sovereign acquired the 281 branches, it faced a daunting customer relationship issue: developing and deploying a multichannel banking and CRM (customer relationship management) system that would successfully span nearly 600 branches in seven states, with two separate call centers, within 10 months. The caveat: Customers must not perceive any interruption in service. An average of 35 percent of bank customers leave during the period after an acquisition if an integration is not done quickly and invisibly, according to Unisys.
Using Unisys retail delivery software, Customer Contact Solutions, Sovereign created a multichannel system that encompasses the branch system and its first online banking initiative.
With a rapid-fire IT and consulting response team that included Sovereign, former BankBoston employees and Unisys, and a strict implementation schedule, Sovereign headed off a projected huge customer exodus, in part by keeping its employee base happy.
The recipe for success in that scenario was specific project plans and strong participation from Unisys, according to McCarthy in Boston.
In addition to what could easily be termed a logistical nightmare of integrating so many branch locations (each with four or five teller stations), two big call centers and a host of legacy systems, the Sovereign/Unisys team also had to develop an IT infrastructure for the branches from the ground up. Because the acquisitions Sovereign made were branches rather than a full bank, there was little infrastructure to build on, according to McCarthy, who had to hire staff and implement systems to build a back office for the branches.
Sovereign uses bank automation software from Fiserve Inc., of Brookfield, Wis., on an outsourced basis. The bank also outsources its commodity-based functions—check processing, for example—that do not have a direct impact on customers. Those things that touch customers, employees and shareholders remain in-house.
Using Unisys Navigator Customer Contact Solution, which offers a suite of integrated components that enable access to common customer information across multiple channels with a single view of customers, Sovereign was able to convert 280 branches and encompass its online banking portal within six months.
Fiserves applications are integrated into Navigator, as are other key systems that encompass functions such as deposits and loans.
“Its a very outsourced environment; that was the primary integration we had to do,” said Brian Ott, partner of global financial services at Unisys, in Blue Bell, Pa. To accomplish this, the Unisys team created application code that could bundle transactions that seamlessly touch the back-end system.
Sovereign recently announced the acquisition of Seacoast Financial Services Corp. and will begin the first conversions to that system next month. Next fall, it will begin conversions of another acquisition, Waypoint Financial Corp.
“Navigator has served us well, but the fact of the matter is its client/server, and its time to look at how we might do better in a browser-based [environment],” said McCarthy. “It could be Unisys successor product, and there are other companies that are well-known” that could fit the bill, he said.