Management Strategies

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Lower IT Budget? Break out the champagne!

In banking as in poker, three 7s beat a pair of 10s.

The IT budget and headcount at Riggs Bank have dropped significantly in 2004, and the bank's management couldn't be happier. In late 2001, Riggs Bank engaged accounting and consulting firm Crowe Chizek LLC (Oak Brook, Ill.) to perform a comprehensive inventory of the bank's information systems. Their recommendation: Replace the entire infrastructure.

In the quest for perfect "10s" in its line-of-business operations, the bank had been prone to "Riggs-size" its various systems, says Wendy Ross, CIO of Riggs Bank (Washington, D.C.; $5.9 billion in assets), a 27-year veteran of the organization.

The result was too much customization for too little benefit. "Our commercial-loan systems may have been a '10'," she says. "We only needed a 'seven'."

Upon realizing that, Riggs Bank turned to Ross to lead an ambitious infrastructure replacement project at the start of 2002. The final switch-over occurred over Labor Day weekend in 2003.

Previously, the bank had outsourced its processing to IBM (Armonk, N.Y.). Now, Riggs uses a core banking system from Fidelity Information Services (Jacksonville, Fla.), an IBM strategic partner. The adoption of Fidelity's ASP model helped the bank free up funds for new systems including Oracle (Redwood Shores, Calif.) databases and an Onyx (Bellevue, Wash.) CRM platform.

The bank also began to offer check images to its Web customers, using systems from AFS (Exton, Pa.). "We recognized that check processing was probably the guts of this whole process," says Ross. Finally, Riggs invested over $2 million in employee training on the new systems, so that its 1,500 employees could "greet our customers the first day and not look paralyzed," she said.

But the biggest change was in the IT department. "We terminated every position in the technology group, designed our new structure, and then rewrote the new job descriptions and asked employees to repost for a job - or their previous job," says Ross.

"I thought it was going to be a lot easier than it was," admits Ross. "It took well over a year." The bank's technology team now consists of 25 fewer people, with 40 percent new faces. "Operations is going through a similar process," adds Ross.

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