The Associated Banks

1
The Associated Banks

• Terry Bobo
• Laquant Bain
• Melanie Jones
• Matt Gregory
• www.prenhall.com/stamper/bdc

2
Background

• The Associated Banks (TAB) was formed under a
  holding company through the merger of eight
  independent banks in the western U.S. Like most
  banks, these eight banks all offer checking,
  savings, ATMs services, certificates of deposits,
  Visa/MasterCard, and etc.
• TAB, the holding companys objectives are to
  provide its customer base with consistent
  comprehensive services, and expand into the
  Midwest, Eastern Seaboard, and South to form a
  national chain of banks.
• In order to reach these objectives, TAB are to
  consolidate the eight banks and make them
  profitable.

3
Objectives of the consolidation

• Retain the individual character of each bank
• Allow any customer of any of the eight banks to
  do business with the other seven member banks
• Make inter- bank transactions transparent to
  customers
• Protect against fraud for inter- bank
  transactions
• Provide uniform services
• Make a profit and be efficient

4
Maintaining Bank Character

• TAB knows that because of the consolidation some
  of its customers will move their accounts,
  because some customers prefer local banks
  compared to regional or national chains.
• TAB intends on minimizing customer loss, by
  maintaining the individual character of each
  bank, retaining commonly used instruments as long
  as possible, and retaining the current employees.

5
Inter-bank Services

• TAB plans to provide customers with services from
  each of the eight banks.
• The services will include ATMs, check cashing
  privileges, savings account withdrawals, and etc.
  
• Also each customer will be provided and serviced
  by a home bank (bank where there account was
  opened) along with a home bank account
  representative.

6
Providing Transparent Transactions

• Customers will be able to perform the same
  transactions at a member bank that a customer
  could perform at his or her home bank, with the
  only difference being is, maybe, a difference in
  slips or ATMs. Most customers are used to these
  differences.

7
Protecting against Fraud

• TAB incurs a great risk of fraud along with the
  implementation of transparent transactions,
  because verifying account balances and customer
  signatures would be difficult at the outset of
  the consolidation.
• As a result, six measures are proposed
  disallowing inter bank transaction until a
  permanent solution phase implementation using
  switched data communications links to verify
  balances and packet switching network services to
  provide connections between member banks using
  voice communications authorizations, and trusting
  the customer.

8
Providing Uniform Services

• This somewhat contradicts the goal of maintaining
  individual bank character, and a compromise
  between these goals are needed. TAB ultimate goal
  is to provide the same services at each bank at
  the same rates.

9
Computing At The Member Banks

• Management sees computerization as the key to
  consolidating the banks. Unfortunately,
  connecting the computing facilities of the member
  banks is not a simple task. The problem arises
  because the hardware and software used by the
  member banks is not homogeneous. Thus even
  though the computing systems can be easily
  networked, the software interfaces to allow
  immediate account inquiries and updates your
  account.

10
The Albuquerque Bank

• This bank uses IBM hardware and banking software
  systems procured from a third party, Hogan System
  Incorporated.
•  
• For online transactions, the software uses IBMs
  Customer Information Control System (CICS) as the
  transactions control process.
•  For Controlling ATM transactions, the bank uses
  Tandem Computers running Applies Communications
  Incorporated software.

11
The Boise Bank

• It is the smallest of the banks and one of two
  banks with unusual data processing
• procedures.
•  
• Boise uses a service bureau to provide its
  computing services. The only in-house
• computers are five microcomputers. These are
  used for loan analysis and to locally process
  data downloaded from the service bureau.
•  
• Boise owns the five microcomputers, the terminals
  that connect to the service bureaus system, and
  several ATMs.

12
The Denver Bank

• The Denver bank uses Unisys hardware and
  software.
•  
• For on-line processing, the transaction control
  process is a standard message control system
  offered by Unisys.
• The ATMs are also controlled by the Unisys system.

13
The Phoenix Bank

• The Phoenix bank uses IBM hardware and software
  that was developed in-house.
•  
• The on-line portion of the system runs under
  IBMs Customer Information Control Systems (CICS)
  transaction control process.
•  
• The ATMs are also controlled by CICS.

14
The Salt Lake City Bank

• The Salt Lake City bank uses Tandem hardware and
  Applied Communications Incorporated software.
•  
• This software makes use of Tandems PATHWAY
  transaction control process for on-line services.

15
The Tucson Bank

• The Tucson bank has the second unique approach to
  computerized banking. In 1988, it decided to sell
  its aging mainframe system and replace it with a
  network of microcomputers and a file server on a
  local area network.  
• The microcomputers are used to provide all
  on-line services including ATM, teller terminal,
  and loan analysis. 
• A service bureau is used for batch
  processing--for example, check clearing.
• Clearly, the banks have taken diverse courses in
  setting up computer services.

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• With the exception of the banks using service
  bureaus, all of the banks own the equipment they
  use. The banks using a service bureau own all the
  equipment they use locally, that is, terminals,
  microcomputers, modems, and multiplexers.

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TABs Primary Applications

• 1.) Automated Teller Machines (ATM)
• 2.) Teller Terminal
• Electronic Journal
• Memo or on-line account positioning
• Automatic balancing
• Off-line journal (if host is not available)
• Enforcement of check cashing limits
• Security provisions
• Teller training modes

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• 3.) Safe Deposit
• 4.) Loans
• Applicant information
• Loan authorization
• Loan pricing
• Loan tracking

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• 5.) Collections
• 6.) Funds Transfer
• 7.) Point of Sale (POS)
• Check authorization
• Electronic gas pumps
• Inventory control
• Merchant cash management
• Electronic messages
• Electronic draft capturing

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• 8.) Microcomputer Banking Services
• 9.) Management Information Support
• 10.) Security

21
Implementation Approaches

• Centralized data processing.
• Decentralized data processing.
• Regional processing.
• Distributed data processing and databases.

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Centralized Data Processing

• One central data processing center.
• Terminals and microcomputers connect to central
  facility.
• All data is stored in the central facility.
• Data needed for local manipulation must be
  printed output.

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Centralized Network Configuration
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Decentralized Data Processing

• Each bank has its own computer system and
  customer database.
• Database is not truly distributed.
• Transfers take place as if the banks were not
  associated.
• Each bank is responsible for its own operations
  and applications.

25
Decentralized Network Configuration
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Regional Processing Centers

• Compromise between Centralized and Decentralized
  Network Configurations.
• Two or more processing centers.
• Two or more member banks to each processing
  center.
• All networked to provide inter-bank linkages.

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Regional Network Configuration
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Distributed Data Processing/ Databases

• Advantage of central and distributed system.
• Data is distributed and located closest to where
  it is used.
• Information can be retrieved as if from a
  centralized node.
• Looks like a decentralized configuration with
  different software implementation.

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Terrys Question

• How can a risk of Fraud be incurred by TAB with
  transparent transactions?

30
Laquants Question

• Why do the different member banks want to
  consolidate?

31
Melanies Question

• What are some of the other Point of Sale services
  that TAB would like to implement?

32
Matts Question

• What are the four types of implementation
  approaches that the TAB are going to try?