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PEOPLE, PROCESS, TECHNOLOGY
 

 

 

 

 

 

 

 


Bank One Corporation is the nation’s sixth largest holding company.  Headquartered in Chicago, they have assets of $290 billion and currently have more than 51 million credit cards issued.  Their customer base includes nearly 7 million retail households and over 20,000 middle market customers.  It also manages $175.5 billion of clients’ investment assets (20). 

When Charles Scharf joined Bank One as CFO in 2000, he realized there was work needed to update the bank’s technology infrastructure.  Then in May 2002, when he was named CEO of the retail group he made this comment, “There has been a tremendous reallocation of those technology development dollars to the banker’s and the teller’s desktop…. For instance, now it only takes 15 minutes to open up an account...[when] it used to be a very ‘back-office’ experience.”  Bank One has installed a profitability management application from Alphablox (Mountain View, Calif) that uses Hyperion Essbase, Microsoft SQL Analysis Server, and Microsoft Access to bring together sales tracking, brokerage, account analysis, real estate, human resources, and telecom data.   Mr. Scharf advised that technology has helped the bank to reduce some support personnel.  “When we started this process, we had about two support people per salesperson….We’re down to one-to-one,” stated Scharf.  The bank was also able to reduce the teller’s by 1000 and is moving towards part-time staffing for peak hours (21).

In the last 2 years, Bank one has decided to jettison its IT (Information Technology) outsourcing agreements with AT&T Corp. and IBM.  Chief Information Officer Austin Adams says the bank has hired 1,700 workers in Chicago and will be hiring more.   Bank One has decided for them it is better to form an in-house group of experts familiar with the company’s technological strengths and weaknesses.  Bank One’s tech budget for 2003 is $1.65 billion (22). 

Security is paramount at Bank One.  With 51 million credit cards issued, the bank wanted to make e-fraud as difficult as possible.  They use Visa Debit Processing Service (DPS) processing platform.  This will provide HNC Falcon Fraud Detection Services which supplies a real-time neural network scoring system, a sophisticated case management workstation, and complete management reporting.  The DPS Falcon fraud detection service is completely integrated with the DPS authorization system and will allow for real-time authorization decision capabilities (23).

Bank One uses state-of-the-art software and other technologies to prevent unauthorized users from accessing their systems from the Internet.  They use layers of technology to help ensure confidentiality:  Browser encryption, username and password, as well as network security and monitoring.  The browser encryption requires the use of a 128-bit secure browser to login to a person’s account.  These browsers employ secure sockets layer (SSL) technology to communicate with servers.  This technology encrypts—or scrambles—the account information so it is virtually impossible for anyone other than the bank to read it.  SSL is a protocol designed to provide secure Internet communication by authenticating that the server connected to is the correct one; it creates a secure communication channel by encrypting all communication between the user and the server; and it conducts a cryptographic word count to ensure data integrity between the server and the user.  Firewalls are used to shield Bank One’s systems and proprietary networks from any unauthorized Internet traffic.  Firewalls also create logs that allow for centralized auditing and security monitoring (24).

This year Bank One has also mailed out over 3 million brochures to individuals in the area of the county where identity theft has been most prevalent.  According the Chris Conrad, senior vice president of fraud management, Bank One will be using Sun Microsystems’ Solaris Web and Proxy Servers to process the high-volume electronic payments.  Bank One processes electronic payments for the U.S. Department of Treasury and runs services for the Department of Homeland Security for a total of 40 million payments and nearly $800 billion annually.  Mr. Conrad states that Bank One has fraud rates 20% lower than other banks surveyed.  He also advised that the bank employs more than 700 individuals in their fraud department.  The Federal Trade Commission recently reported that more than 9.9 million Americans have been victims of identity theft in the last year.  Businesses have lost more than $48 million and consumers approximately $5 billion in the past year (25).  Bank One is doing their part to try and bring down these statistics.

Dan Casey knows that everything in life is a risk. The trick is in knowing which ones are worth taking, understanding how to price the risk and realizing that the nature of risk is constantly changing.

“It’s an interesting and challenging business because you have to react quickly to both opportunities and threats,” says Dan, who’s spent most of his career working on risk- and credit-related issues for Fortune 500 clients. “The events of this past year clearly demonstrate that you have to be vigilant and on top of every situation. You can never let your guard down if you’re going to manage risk and not be managed by it.”

At Bank One, everyone’s a risk manager. Dan’s just got it in his title.

DANIEL CASEY
SENIOR UNDERWRITER/RISK MANAGEMENT
EMPLOYEE SINCE 2002


Risk Management

Those who work in risk management contribute to the profitability of the organization by working to minimize credit losses that result from customer fraud.  The Risk Management Analyst’s job description would include analyzing customer transaction patterns to detect fraudulent activity; reviewing accounts for possible fraud; making recommendations to management with regards to fraud trends, workflow, and strategy revisions to improve fraud detection rates.  According to Linda Bammann, Chief Risk Management Officer at Bank One, “Risk management is the responsibility of every Bank One employee, not just the corporate risk staff.  Each of our 74,000 employees owns the risk issues of his or her specific daily activities.”  Bank One is developing new processes and systems to improve risk measurement and reporting.  Although e-fraud is currently a small segment of risk management, the more technology driven business becomes the greater the proportion of fraud which will be generated electronically.  Bank One began to restructure risk management disciplines in late 2000, with continuing through 2002.

 

Risk Management - Managed Net Charge-Offs

 

Ms. Bammann is confident that Bank One will be known for their core competency in risk management disciplines and is focused on balancing risk and reward to assist in building a stronger future for her company (26). 

 

 

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