Bank and Fidelity

In the ever changing depository financial institutioning industry, commencement exercise faithfulness Bancorp had expectant to be i of the largest holding companies of eight financial institutions and over five hundred branches. Their growth has been by the acquisitions of other smaller institutions and internal growth generated by self-coloured relationships with customers. This growth has come at a live and start fidelity has been left with a complicated mix of systems, operations, and organizational culture. for the first period fidelity allowed the eight financial institutions to operate totally independent of severally other and the corporate office solely managed the integration of the financial coverage responsibilities. The non-integration of systems and operations has also left firstly faithfulness with higher cost and the read to make changes which get out allow them to be competitive in the rising. By the early 1990s prototypal faithfulness had begun to integrate whatsoever of the operational functions, but had yet to connect them further.Due to changes in coasting regulation, the US government had begun cracking down on new rules on financial reporting, asset quality, and capital requirements for the banks. The government wanted better controls from upper focusing and the only way First faithfulness could come across this was to integrate systems, management, and unite all eight financial institutions into a more than consolidated with slight autonomous feel. Management make this their highest priority and dress a exigent deadline of 18 months on this task.This deadline put two major finalitys directly fore of First fidelity, organizational structure and method of achieving the full integration. In devote to evaluate the full impact of their ratiocination on organizational structure changes, First Fidelity looked at the following criteria Cost Effectiveness responsiveness to Business Needs Responsiveness to Ind ividual Needs Ability to regulate Products and Service Offerings Ability to Support Outsourcing Options Ability to Support Acquisitions Service/ tint Orientation/IncentivesWhile these criteria would decide what organizational structure First Fidelity would consent, they also had to decide how the systematisation and consolidation plan should be conducted, internally, through the use of consultants, or through outsourcing. First Fidelity saw outsourcing as the most viable solution to their problem and felt it would best action the company by achieving the goals in the desired time frame. First Fidelity has recognized several potential outsourcing vendors and determined the favors and disadvantages of each vendor.Their decision this instant must be to select the proper vendor who bequeath append them non only with the go needed to move them through the rationalization and consolidation process, but one which will provide quality services and cost savings to First Fidelit y for eld to come. Changes to Organizational Elements The major change First Fidelity will be squeeze to hatful with is the change to their organizational structure and hierarchical relationships within the firm. Prior to the rationalization plan, First Fidelity operated as eight separate financial institutions. stopping points were made independent from each other and there was no single soul to oversee all operations from the holding company point of view. When bear Parcells was put in charge of all operations, and improvements were needed immediately, he put a plan in place to consolidate functions and make First Fidelity a more cost efficient organization. In enounce for this to become a success, First Fidelity was going to first have to restructure their separate cultures into a single unified culture.Parcells was planning on consolidating the separate operations and systems which the eight banks used. To make this a success, all parties need to be thinking in the same di rection and accepting of the coming(prenominal) changes. Parcells task of unifying First Fidelity under these same systems would not be a success if the current management did not record the reasoning behind the changes and understand the big picture of increased meshwork and long-term sustainability of First Fidelity. Current management would also be forced to deal with changes in management structure.This will give the First Fidelity corporate office more control over the eight banks and curb the banks operate in a consolidated manner once the sign changes are implemented. Systems Integration The importance of systems integration goes well beyond the cost efficiencies First Fidelity hopes to experience. The system changes will put one buttock on the eight financial institutions and will provide them with the ability to accomplish many of the goals mentioned before under the criteria for organizational structure changes.First Fidelity should also take this opportunity to take advantage of the best practices which tramp be found through their analysis of their own internal operations and systems, external competitors, and the potential third parties they are analyzing for outsourcing opportunities. As the 25th largest bank holding company, First Fidelity has the potential to take advantage of improvements in technology. By decreasing their transaction costs through technology, First Fidelitys high volume will allow them to take advantage of economies of scale.An integration of systems will also make First Fidelity a much more prepossessing candidate for merger activity. They will every be able to expand and make new acquisitions integrate more smoothly into the First Fidelity family, or make themselves more attractive as an acquisition target. Outsourcing at First Fidelity First Fidelity is in a very difficult situation. The short time flowing in which First Fidelity has to turn around its operations and systems does not ffer First Fidelity many optio ns. They are seeking a saucer-eyed solution to a problem which should have been issueressed a decade earlier when they had begun merging the banks under one holding company. When considering the use of outsourcing, businesses should not rush this decision and should analyze what functions and how important these functions are to the business. As a general rule, core functions should not be outsourced to third party vendors. only when non-core functions should be considered, and only when significant cost savings will be made and the vendor offers a long-term, high quality service which will not have a negative impact on the customers of the outsourcing firm. First Fidelity needs to consider whether their systems and operations are part of their non-core functions and will truly add value through cost savings. Long marches Implications of First Fidelity Decision First Fidelitys decision to outsource will have long term implications on the future of their banking operations.When F irst Fidelity began investigating the decision to outsource in 1990, one important variable would be the future of banking and which technologies would be the future of bank operations. The upcoming jump in the use of technology in banking will have a major impact on the systems necessary to be successful in banking. This offers even greater risk for outsourcing, since First Fidelity will be giving up much of their control of their technology.The Decision and Future of First Fidelity. First Fidelity did decide to use explosive detection system as the company which will handle their software systems and data sum of money operations. The contract was valued at $450 million over ten years and was considered the largest outsourcing contract for financial institutions at that point in time. In 1996, First Fidelity merged with First Union, in what was then considered one of the largest mergers in the banking industry, and made First Union an imposing force in banking along the east coast of the United States.One of the major factors for the merger was to add additional economies of scale to First Unions operations and to slump the high costs of technology which banks were experiencing. First Fidelitys decision to integrate their systems in 1990 came at an integral point in time for the bank holding company. It provided them with cost savings and made them a strong acquisition target by un-complicating their systems and making their operations more efficient.