Does money describe the main business of a financial-services company? While the obvious answer is "of course," I believe that, just as important, financial-services companies are in the business of customer service. Therefore, the business and IT strategy of a company like The PNC Financial Services Group must ultimately focus on the customer.
At PNC, we've launched a series of sharply focused IT projects, all aimed at improving the service and value we provide to customers. As CIO, I spend about a quarter of my time meeting with customers, determining their needs now and in the near future. Information technology then becomes a primary tool for serving these customers better, faster and more comprehensively.
The results speak for themselves: PNC is enjoying a period of growth. Though 2003 net income of $1 billion was down from $1.18 billion in 2002, fourth-quarter earnings of $274 million were up 5 percent from the fourth quarter of 2002. Meanwhile, 22 percent of PNC's revenue in 2003 was derived from processing-related business, including fund servicing, treasury management and commercial real-estate servicing. On the expense side, we're on target to meet our goal of reducing PFPC Worldwide's expenses by $50 million, without compromising service levels. Our PFPC Worldwide entity, which I head, is a full-service mutual-fund transfer agent.
To a large extent, I credit our technology decisions and initiatives as major contributors to these achievements. Since becoming CIO six years ago, I've directed the strategic use of technology to deliver the variety and quality of services that our customers demand.
PNC is a large, complex organization. Consumer banking constitutes about 60 percent of our earnings. We operate bank branches throughout our core mid-Atlantic region of Delaware, Kentucky, New Jersey, Ohio and Pennsylvania. Our other lines of business include wholesale banking, encompassing corporate banking, real-estate finance and asset-based lending; wealth management; asset management; and global fund services.
As a result, we have a broad array of customers, ranging from mutual-fund leaders to individual investors. Regardless of customer category, our strategy for success rests on three basic principles:
The customer is at the center of each of these principles. And increasingly, IT plays a critical role in fulfilling these crucial goals.
PNC took a leap of faith in 1990 when we decided to merge onto a single IT platform, consolidate our data centers and centralize our back-office functions. Since then, we've made numerous acquisitions, including nine financial institutions, as well as the companies that now form the basis of our nonbank businesses. This early commitment to consolidation helped us lower costs and improve operational efficiencies as the various companies merged. And it has contributed to continued savings and high productivity.
Just as important, our tight, integrated infrastructure has provided the basis for initiatives that dramatically enhance the customer experience.
These initiatives fall under the umbrella of our "Segment of 1" concept, which is a guarantee that our customers will experience maximum personalization and information access, regardless of where or how they do business with us. For example, in the recently completed IT project dubbed Project Genesis, we built a multichannel distribution system for our retail banking sector based on CRM technology from Siebel Systems and IBM, with a data warehouse on the back end.
As a result, it no longer matters how or where a customer touches us -- at a bank branch, in a supermarket, by ATM, via telephone or through our Web interface. Regardless of the channel, the customer transaction is logged and the account data immediately updated. If a customer needs assistance, our service representatives can access up-to-the minute information. Obviously, these real-time capabilities have vastly improved our customers' overall experience.
Project Genesis has been such a success that we're now deploying similar technology for our institutional customers. But extending CRM to larger corporate customers can be a challenge for two reasons. First, each client company might functionally be multiple clients because different groups within the company use various financial products and services -- for example, cash management and corporate finance. Second, we've historically supported these products and services with separate applications and separate teams of sales and service specialists. These two factors together have made it difficult to get the single view of the customer that's needed for optimal customer service.
To remedy this situation, we're extending the Genesis approach into our wholesale banking business, leveraging our enterprise Siebel/IBM CRM software. It will more closely aggregate the applications and information on the institutional side. As a result, we'll have a more holistic view of our corporate clients, so we can serve them faster and more efficiently. As with the original Project Genesis, Wholesale Genesis involves much more than just systems integration. We're also reengineering our approach to relationship management to assure maximum understanding of clients' needs.
Indeed, our early standardization on a single platform has proven remarkably farsighted. We can consistently add functionality and services as our customers need them, without repeatedly re-engineering or redesigning our IT infrastructure.