Bank OneIn 1929, Commercial National and City National Bank of Commerce of Columbus, Ohio, merged to form City National Bank and Trust. City National offered the first Visa credit card outside of California in 1966; it also created the first drive-up bank, and was one of the first banks to use ATMs. A holding company called First Bank Group of Ohio was formed and it became Bank One in 1979. As interstate barriers to banking fell, the bank moved into Indiana, Kentucky, Michigan and Wisconsin.
The First National Bank of Chicago and Bank One merged on October 2, 1998. The merger between Bank One Corporation and First Chicago NBD Corporation created what became known as Bank One, Chicago’s largest bank (one of the largest in the Midwest and nation). Bank One Corporation and its stock was traded under the New York Stock Exchange under the symbol One. This merger created the nation’s 5th largest Bank with assets of more than $240 billion. Bank One is a major corporate bank nationally and in selected international markets in 11 foreign countries, the nation’s largest credit card company which also is a leading retail bank in eight states, the leading business bank in the Midwest and Arizona, and the largest bank mutual fund company.
With assets of more than $270 billion currently, Bank One Corporation is one of the nation’s largest financial services companies. Bank One currently serves more than 53 million credit card customers nationwide as well as 7 million companies in 14 states. It also manages more than $149 billion of assets for investors. The bank has 74,000 employees at 2000 branches in 14 states. On July 1, 2004 Bank One became a part of the new JP Morgan Chase. The mergers of the credit card companies, broker/dealer and lead banks will be completed over the next nine months. JP Morgan gives Bank One scale and size. However, the Bank One brand continues to be used in the marketplace.
Bank One provides several services to its customers, some of which include, retail services, Commercial Banking, Card Services, Investment management group. The retail service is broken down into, checking and savings accounts, consumer lending, Small business Banking, Debit/ATM Cards, Investment Accounts, Credit Cards, Insurance, Auto loans and leases, Online Banking and Home loans.
The Investment Management Group is broken down into portfolio management, mutual funds, financial planning, brokerage, private client services, corporate and personal trust, alternative asset management, insurance, securities lending, custody and master trust. The commercial services is broken up into global cash management, commercial lending, loan syndications, commercial cards, investment grade securities, derivatives, foreign exchange, and global trade.
On the credit-card side, the services can be further broken down into credit cards, affinity cards, reward cards, smart cards, stored-value cards and business cards. Its most competitive environment right now is its Retail and Credit card services. This unit of its business has proved to be volatile and problematic for the bank. The unit has recently won some important new alliances, including Amazon.com and Walt Disney Co.
But analysts question whether growth will ever return to the levels that were considered normal in the 1990’s. According to Bear Stearns’, credit card loans is at the lowest level seen in 20 years, so there is intense competition in that industry, one reason is because home equity loans are so low that card borrowing makes less sense for consumers. While the bank has made a lot of progress fixing inherited problems, competitors who are less burdened have continued moving ahead.
Many of these competitors are attacking Bank One in its core markets, including Chicago. Major players such as Bank of America and Washington Mutual are entering this market, while established competitors such as Fifth Third Bank are also competing fiercely. Some of Bank One’s top competitors are Citigroup, LaSalle, Bank of America, Wells Fargo and Company and Fifth Third Bank.
According to SNL Financial (www.snl.com), after the merger of Bank One and JP Morgan, the company has a market share of 12.76% in Illinois. LaSalle Bank has a market share of 10.04%; Citigroup has a market share of 1.87% while Fifth-Third has a market share of 2.45% in the State of Illinois. Many of the functions of Bank One are now being integrated with JP Morgan due to the merger between the two organizations. One key outcome of the JP Morgan and Bank One merger/acquisition is that now Bank One and JP Morgan Chase together can rival the footprint in retail banking that Citigroup possesses. While Bank One has over 2,000 physical bank branch locations, in which the bank’s retail and commercial clients can use as a footprint for customer contact, many of Bank One’s operational processes are automated and delivered through information technology.
For example, Bank One’s Internet website which is accessible with secure log on features for both retail and commercial banking clients is used in place of many bank services that had typically been performed at branch sites in the past. Bank One’s online bank services are widely considered some of the best in the industry. Sophisticated information technology which drives these online services is essential to Bank One’s operations. JP Morgan has recently announced that many of the IT related activities that they have been outsourcing will now be brought back in house. According to an IT manager at J.P Morgan Chase, “the bank plans to begin talks aimed at restructuring the agreement with IBM once the financial aspects of the Bank One acquisition are completed.” (Computerworld 6/14/2004) J.P Morgan had been outsourcing thousands of IT related jobs and work to IBM.
The shift in bringing many of these functions back in house can certainly be attributed to Bank One’s strategy of bringing “most of its IT operations back in-house since late 2001 as part of an initiative spearheaded by Dimon and managed by CIO Austin Adams.” (Computerworld 6/14/2004) Many changes and improvements could be made to the IT related operational processes at both Bank One and JP Morgan Chase over the coming periods. Other key operational processes performed at Bank One are related to the bank’s credit card processing division. The card issuing and processing divisions are also very heavily built on IT related activities. It remains to be seen how these processes will change with the J.P Morgan merger, although major changes are unlikely.
The organizational structure and business units of Bank One are being integrated with J.P. Morgan. There are now five main business divisions. “The investment bank advises on corporate strategy and structure, raises capital, makes markets in financial instruments and offers risk management services.” (Standard & Poors Stock Report “JPM”) The company is a leader in lending and the second largest company performing investment grade bond underwriting in the country. The Chase Financial Services division is the fourth largest card issuer in the country. Other divisions include an auto finance group, investment management, home finance, and regional banking. Clearly, much of Bank One’s pre-existing organizational structure is simply being merged into J.P. Morgan’s.
LaSalle Bank (ABN AMRO)LaSalle Bank is headquartered in Chicago and has $65.1 billion in assets. One of the largest banks in the Midwest and second largest in Chicago, LaSalle Bank serves individuals, small businesses, middle market companies and institutions with streamlined solutions to meet the complete scope of customers’ financial needs. LaSalle has over 140 retail locations and 500 ATMs throughout Chicago and the suburbs and offers online banking and tele-banking to meet customers’ personal banking needs.
LaSalle maintains regional lending offices in Cincinnati, Cleveland, Denver, Des Moines, Indianapolis, Miami, Milwaukee, Minneapolis, Peoria, Pittsburgh, Rockford, St. Louis, and Tampa. Subsidiaries include LaSalle National Leasing Corporation, LaSalle Business Credit, LLC and ABN AMRO Financial Services, Inc. Being a good corporate citizen means being actively involved in the community. LaSalle Bank continues these efforts and encourages employees to participate through mentoring, volunteering, sponsoring and public service. Throughout the bank they have a range of events that show their community commitment, from the grand scale of The LaSalle Bank Chicago Marathon to the personal service of the Tax Assistance Program. LaSalle Bank believes that community involvement is not the law, but it should be.
The products and services that a provided at LaSalle Bank are: online services, mortgages, loans and lines of credit, checking, savings and money market, certificates of deposit, investments and insurance, wealth management, ATM debit cards, credit cards, gift cards, money transfer cards, telebanking, direct deposit, land trust, United States Savings Bonds. Each goal that the organization desires to attain is somehow linked to customer satisfaction.
When trying to improve the number of new accounts and business accounts that are being open, one way to do that is to spread the word through the current customers that you have. If you have customers that are satisfied they are sure to tell others about your specific bank. If you have customers that are unsatisfied they are likely to bad mouth you and discourage others from opening an account with you. The goal of shortening the time needed to make a deposit is in direct response to customer dissatisfaction. Customers complained that it took to long to make a deposit and therefore the bank made it a goal to decrease the amount of time it takes to make a deposit.
There are several operational processes that are used to provide LaSalle Bank products and services to their customers. Service Desk Operations consists of answering any questions that a customer may have. It is measured by creating a survey that rates the service desk on a scale of one to ten. Ten would be the most positive or that the customer was extremely satisfied with the service and one would be the least positive or that the customer was not satisfied at all with the service.
The questions will be in regard to how timely and well prepared the service representative was in answering customer questions. In order to entice the customer to fill out the survey give out a small gift to those that fill it out. Making a Commercial Deposit is another process that focuses on customers so they will have their deposit made in a short amount of time. This is measured by taking samples during peak times. This means looking at teller tape which records the number of transactions completed within the day. The deposit transaction times can be divided by the total time taken for all transactions in order to give the percentage of time taken to process a deposit. The target time should be five minutes or under.
Another important process at LaSalle is opening a new account where customers look to be enticed into opening a new account. They also would like to be helped if they have any questions with the account. LaSalle measures this process by entice customers by providing a fifty dollar bonus for anyone that opens a new account. Contact the customer within one day, two weeks, and two months of opening a new account. Ask them to rate their satisfaction with their new account on a basis from one to five. Five would mean that they are very satisfied and one would be that they are not satisfied at all. After they make the rating ask the customer as to why they gave that specific rating. LaSalle keeps a tally of all comments and at the end of two months looks at all the ratings and comments and develops a plan for how the organization can improve.
LaSalle Bank also offers its customers online access to their accounts because of their great technology. Customers can sit at home and manage their accounts through online banking, online investing, mortgage access, VIP secured, VIP trade, credit card, to ABN AMRO Group 401 (k). As a remote user of LaSalle Bank IPA Services, people get the advantage of any on-going system updates without having to install new software. They also will notice that reports have an updated look, can be customized, and are much more flexible. In addition they can compare portfolios against major indices.
Future of Bank One/LaSalle BankConsolidation is becoming increasingly common in the banking and finance sectors in the United States This is happening in retail banking, commercial banking, with foreign banks, investment management firms, and many of the companies that provide credit card and ATM processing services. Many large players are scooping up smaller competitors in order to grow and many smaller companies in these sectors are forced to do so in order to survive.
ABN AMRO, which controls LaSalle Bank has acquired many other banks in the United States in the last decade and created an enormous banking division for the worldwide financial services firm. Other foreign firms, such as RBS (Royal Bank of Scotland) have also made recent large banking/financial service purchases in the United States. RBS purchased Charter One Bank; a Midwest based bank, as well as Lynk Systems, one of the largest processors of ATM transactions in the country. Clearly, consolidating in the sector is increasingly common. Bank One and J.P Morgan are together now able to rival Citigroup in retail, commercial, and investment management. This is a task that would have been impossible without a merger between the two organizations.
J.P. Morgan (JPM stock ticker) has a “buy” rating on the stock by Standard & Poors, which one of the most reputable providers of independent financial research in the world. While LaSalle Bank and Bank One compete for Chicago area retail banking business, their overall business strategies are quite different and do not overlap considerably outside of basic retail banking. While the growth rate of J.P. Morgan is not expectedly lower due to the size of the organization and the industry as a whole, the growth is similar to that of the company’s key competitor, Citigroup.
The future for J.P. Morgan is likely to be filled with additional mergers and acquisitions. It remains to be seen how the company will compete from an operational and service standpoint with Citigroup; however, it will be a protracted battle between the two stable behemoth financial services firms.