The Associated Banks

1
Team 8

• The Associated Banks
• Team Members
• Mary Redmon Joseph
  Crittenden
• Alicia Stevenson Steven Shryock
• Charles ONeal
• http//www.prenhall.com/divisions/bp/app/stamper/b
  dc/student/cases.html
  

2
Introduction

• The Associated Banks (TAB) formed through a
  merger of eight independent regional banks in the
  western U.S. Before expanding into other regions
  TAB wants to merge the eight banks and make them
  profitable.

3
Data Communication Objectives

• To provide a short term solution for customer
  service and profitability.
• Decide which WAN service to use.
• Choose between an implementation of centralized,
  decentralized, or distributed.
• If the decentralized or distributed network is
  chosen should it be a heterogeneous or
  homogeneous environment.
• How to manage the selected network.
• How security issues should be addressed to
  protect from fraud.

4
Consolidation Objectives

• To retain the individual character of each member
  bank.
• To allow a customer at any of the eight member
  banks to use the services of any other member
  bank.
• To make inter-bank transactions transparent to
  the banks customers.
• To protect against fraud for inter-bank
  transactions.
• To provide uniform services at all banks.
• To be efficient and profitable.

5
Maintain Bank Character

• TAB intends to maintain the individual character
  of each bank, changes will be made gradually.
• Most employees of the banks will be retained in
  their positions. The major personnel changes will
  occur at the banks board level by replacing the
  boards of each of the member banks with a
  consolidated bank board.

6
Interbank Services

• Customers of each of the eight banks must be able
  to use the services of any of the other seven
  banks. ( ATMs, check cashing privileges, savings
  account withdrawals, etc.) Each customer will
  have a home bank which is the bank at which
  their account is opened. The other banks, for
  each customer, will be termed member banks.
  This is to provide a focal point for banking
  services.
• Corporate customers will be assigned a home
  bank, and also a home bank account
  representative. The home bank account
  representative will be responsible for helping
  the customer attain consistent and proper service
  throughout all TAB member banks.

7
Transparent Transactions

• When using the services of another member bank,
  customers must be able to perform transactions in
  essentially the same way they use the service at
  their home bank. A customer using the services
  of a member bank must be able to withdraw cash
  from a savings account in exactly the same way
  each member bank.

8
Fraud Protection

• In providing transparent access, TAB incurs a
  greater risk of fraud. At the outset of the
  consolidation, verifying the account balances and
  customer signatures between member banks will be
  difficult. The technology for signature
  verification over communication links has been
  available for several years, however, since there
  are no communications links between member banks,
  there is no direct way for verifying account
  balances.

9
Proposed Measures to be taken

• Disallow inter-bank transactions until a
  permanent solution is implemented.
• Phase implementation of inter-bank transactions
  by bringing member banks into a network two or
  three banks at a time.
• Use switched data communications links to verify
  balances.
• Use packet switching network services to provide
  member bank connections.
• Use voice communications to make authorizations.
• Trust the customers to do the right thing.

10
Providing Uniform Services

• Providing uniform services somewhat contradicts
  the goal of maintaining each banks individual
  character. A compromise between these two goals
  is obviously needed. Although all member banks
  offer the same services, there is a variation
  among charges and conditions for the services.

11
Differences

• Types of demand deposit accounts.
• Some banks provide MasterCard or Visa cards as
  debit cards rather than credit cards.
• Interest rates for all types of accounts vary
  among the member banks.
• Differences in the way Senior citizen and youth
  accounts are implemented in the six member banks
  that provide these accounts.

12
Profitability and Efficiency

• The board anticipates that during the first year,
  profits may be low or the business may run at a
  loss the costs of consolidation will likely
  erode profits at the outset.
• One of the keys to profitability is the ability
  to run an efficient operation, and a great deal
  of efficiency will depend on how the bank
  computerizes it operations.

13
COMPUTING AT THE MEMBER BANKS

• Management sees computerization as the key to
  consolidating the banks.
• However, the hardware and software used by the
  member banks is not homogeneous.
• Even though the computer systems can be easily
  networked, the software interfaces to allow
  immediate account inquires and updates over the
  network are not in place.

14
The Albuquerque Bank

• The Albuquerque bank uses IBM hardware and a
  banking software system procured from a third
  party, Hogan Systems Incorporated. For on-line
  transactions, the software uses IBMs Customer
  Information Control System as the transaction
  control process. For controlling ATM
  transactions, the bank uses Tandem Computers
  running Applied Communications Incorporated
  software.

15
The Boise Bank

• The Boise Bank uses a service bureau to provide
  its computing services. The only in-house
  computers are five microcomputers, used for loan
  analysis and to locally process data downloaded
  form the service bureau. Boise owns the five
  microcomputers, the terminals that connect to the
  service bureaus system, and several ATMs. The
  service bureau also provides the ATM services for
  Boise.

16
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.

17
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 CICS transaction
  control process. The ATMs are also controlled by
  CICS.

18
The Portland Bank

• The Portland Bank uses basically the same
  hardware and software as the Denver bank.

19
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.

20
The Seattle Bank

• The Seattle bank uses the same system as both
  Denver and Portland.

21
The Tucson Bank

• In 1988, the Tucson bank replaced its aging
  mainframe 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.

22
TABS Primary Applications

• Automated Teller Machines
• Teller Terminal
• Electronic journal
• Memo or on-line account posting
• Automatic balancing
• Off-line journal in case the host is unavailable
• Enforcement of check cashing limits
• Security provisions
• Teller training modes

23
TABS Primary Applications

• Safe Deposit
• Loans
• Applicant information
• Loan Authorization
• Loan pricing
• Loan Tracking
• Collections
• Funds Transfer

24
TABS Primary Applications

• Point of Sale (POS)
• Additional services
• Check authorization
• Electronic gas pumps
• Inventory control
• Merchant cash management
• Electronic messages
• Electronic draft capturing

25
TABS Primary Applications

• Microcomputer Banking Services
• Management Information Support
• Security

26
Implementation Approaches

• Centralized data processing
• One central data processing center
• All customer accounts will be maintained at
  central facility
• Decentralized data processing
• Each member bank has its own computer system and
  customer database
• The database is not truly distributed
• Each bank selects its own hardware and software

27
Implementation Approaches

• Regional Processing Centers
• Compromise between a centralized system and a
  completely decentralized system
• Two or more processing centers
• All regional centers will be networked to provide
  complete inter-bank linkages

28
Implementation Approaches

• Distributed Data Processing and databases
• TAB has the advantages of both centralized and
  distributed system
• Data is distributed and located closet to where
  it is used
• Information can be retrieved from multiple nodes
  as though it were located on one centralized node

29
Charlies Question

• According to TAB what is a home bank and how
  does it differ from a member bank?

30

Stevens Question

• What are some short term measures the TAB banks
  can propose to protect themselves against fraud?

31
Marys Student Question

• As you know some of the member banks are
  currently using a service bureau. What is a
  service bureau?

32
Alicias Question

• List and describe three of TABS
• Primary Applications.

33
Josephs Question

• List and describe 2 of the 4 implementation
  approaches used by TAB.