Fleet: Turning on a DollarBy Edward Cone Print
FleetBoston Financial's bottom line is getting hammered. So Fleet is using ERM technology to ensure its commercial bankers can act quickly to serve the needs of the most profitable customers.
With financial news channels hinting that the Federal Reserve Board would reverse course and announce it was leaning toward higher interest rates at its March 19 meeting, Peter Benham began looking for ways to capitalize on that possibility.
A corporate banker at FleetBoston Financial, Benham went through his portfolio of large public companies to see which ones had been contacted recently about using derivatives and other rate-sensitive products from FleetBoston. Then he ran a quick profitability analysis on possible sales to see which leads made the most sense for his bank to pursue.
Helping a company hedge against a rise in interest rates by selling it derivatives or foreign exchange products drives additional revenue to FleetBoston, while making the bank a more valuable partner to its customers in a competitive market. "You come in and see that Fed meeting is going to happen, and you want to see if a customer has been doing treasury business with us and if your derivatives guy has been out there, and maybe it's time to follow up," says Benham, a corporate relationship manager at the New England banking institution, which has $203.6 billion in assets.
To help Benham move quickly, FleetBoston has put everything he needs to assess and act on sales leads at his fingertips. A corporate portal called Business Advisor gives him news stories and market information, as well as analytical tools and contact information for product specialists within the bank, all on his desktop. "This is stuff we always have done, but now that it is all in one place, it is much more efficient. The beauty of it in such a competitive marketplace is that it lets you make decisions much faster," says Benham.
Fleet is counting on a host of bankers like Benham to find ways to generate more profit from reliable, corporate customers who buy products in addition to their core credit business. The company ended 2001 on a disastrous note, with earnings plunging to $931 million, down from $3.9 billion in 2000. Return on equity plummeted to 4.8%, from 22.0%.
Among the causes: charges totaling $1.1 billion related to its operations in Argentina; another $1.1 billion for the value of its Principal Investing portfolio; $866 million related to its acquisition of Summit Bancorp; and a host of other charges. Wholesale Banking, the part of FleetBoston that includes Benham's Fortune 500 customers, accounted for nearly 37% of the New England banking giant's $12.8 billion in revenue in 2001. More importantly, it recorded $1.2 billion in profits last yearmore than the entire company reported.
Fleet's portal is meant to make its corporate bankers more efficient by focusing their time on selling and managing relationships, rather than pulling together facts and analysis. The bank calls the customer-relationship portal that serves as Benham's home page Business Advisor. Siebel Systems, maker of the underlying software, calls it Employee Relationship Management (ERM) software, and markets it as part of a suite of tools usually called customer-relationship management software.
Increasing the number of financial products it sells is key to Fleet as it competes for much-coveted corporate clients. "You need to create something unique for each customer," says Tom Richards, an analyst at Meridien Research. "The big corporate customers have so many banks lined up for their business that they can play them against each other."
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