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Anthony Guerra, Managing Editor, Wall Street & Technology
Anthony Guerra, Managing Editor, Wall Street & Technology
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A Convergence in Progress

The two-year convergence plan bringing J.P. Morgan and Chase together.

When J.P. Morgan & Co. joined forces with The Chase Manhattan Corp. on Dec. 31, 2000, a nearly $700 billion financial-services colossus was created that offered a complete array of products and services, from private banking and investment management on the J.P. Morgan side to credit cards and insurance on the Chase side. The challenge with the merger, however, was bringing the companies together to form a cohesive and converged business, where cross-selling and shared technologies reaped higher profits and lower costs.

In the case of J.P. Morgan and Chase coming together to form JPMorgan Chase, a two-year convergence plan was devised. Jim Mazarakis, managing director of the combined institution's private banking and investment-management group-and who also heads the US applications delivery group-says the firm has made major strides with that plan.

At the core of the plan is construction of a Sybase (Dublin, CA)-powered, client/server data warehouse, which allows for a company-wide view of client information across the diverse areas of JPMorgan Chase's business. Speaking from the perspective of private banking, Mazarakis says individuals can call into one number and deal with the same small, familiar circle of client-services representatives, who have the information at their desktops to handle most customer inquiries without giving out another number to call.

"For a call coming in to the client services side of the private bank, we would have aggregated information," says Mazarakis. "It would provide a look at the client, in terms of JPMorgan Chase, as a whole."

The first step in such a client call would be to authenticate the caller, verifying the individual on the phone may have access to the account. Secondly, the rep would determine the caller's level of access. Some callers, for example, are only permitted to check balances, while others may be permitted to initiate trades and transfer money between accounts. "The fact that we have been able to bring together client information, in about a year, is a major achievement for our private banking clients," Mazarakis says.

Another accomplishment in their first year together was that Chase and J.P. Morgan were able to bring the clearance functions for Hambrecht & Quist's brokerage business-which Chase acquired in 1999-from service provider Lewco Securities, in-house to the JPMorgan Chase platform. Also, J.P. Morgan was able to bring its cash management business, which had been outsourced to Fiserv (Brookfield, WI), in-house to Chase.

The second year of the merger will see a major back-office consolidation, bringing together applications that track client assets.

Prior to the merger, J.P. Morgan had been using Wayne, PA-based SunGard's OmniTrust, an integrated multi-currency trust and custody system that provides online, real-time accounting for investment management assets. Going forward, however, the bank will be consolidating that processing to SunGard's Global Plus, a multi-currency and multi-lingual asset management and accounting platform used at Chase.

Mazarakis contends that tough economic conditions, such as those currently facing the financial services industry, are a good time to concentrate on merger work. "When the economy is robust and growing, people don't have a chance to sit back and converge as much as they would have," he says. "Take the examples of Morgan Stanley (which merged with Dean Witter in 1997) and Citibank (which merged with Travelers Group to form Citigroup in 1998), which were done in robust economies. They have not finished. In tough times you have more of a focus and more of an impetus to get it done."

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