January 27, 2004

When it comes to M&A in banking, integration's 'out' and conversion's 'in,' according to Susan Landry, vice president and research director, Gartner, Inc. (Stamford, Conn.)

That should become evident during the technology transfer between JPMorgan Chase and Bank One. "My guess -- and we're all guessing at this point -- is that the technical strategy would be less about merging those two things together and more about conversion," says Landry. "This is true of almost every bank merger."

J.P. Morgan Chase's strengths lie in "global services for corporations," while Bank One focuses primarily on retail banking, according to Landry.

Furthermore, the two banks have had vastly different technology strategies. "Bank One has been engaged in bringing as much as they could back in-house so that they could have direct control over service and have greater control over the cost," she says. "Chase, on the other hand, was actively engaged in and had one of the biggest IT outsourcing deals with IBM."

Landry said that the merger will likely involve moving customers over to a single technology platform, rather than attempts at integration. For example, it would make sense to move J.P. Morgan Chase's retail banking customers onto Bank One's retail platform.

"Everyone talks about 'integration'," says Landry. "In fact, there is very little technological integrating that occurs, not to say that there isn't a huge technical task."

"The technologies are integrated but it is much more about converting customers from one type of technology to another," she adds.