Magazine article American Banker

Shawmut Looks to Outsourcing; Back Office Operations Targeted in Cost-Cutting Effort

Magazine article American Banker

Shawmut Looks to Outsourcing; Back Office Operations Targeted in Cost-Cutting Effort

Article excerpt

Shawmut National Corp. is looking to outsource - but its computer facilities are not the first targets.

While expense reduction is a key goal, the $22 billion-asset company is not handing over its data center or even its check-processing operation to third party vendors just yet.

Savings in |Boring' Areas

Instead, it has embarked on a program to farm out selected smaller back-office operations that, in sum, may account for millions in annual back-office cost reductions.

"The so-called |boring' areas of the bank have proven not so boring to us," said Gerald A. Fiore, a vice president in charge of mail operations at Shawmut in Boston. "In fact, we have identified them as some of the best places for financial gain in the bank."

After two consecutive years with losses in excess of $125 million, Shawmut has embarked on an aggressive campaign to improve its performance in the back office.

In Mr. Fiore's department alone, Shawmut is saving $600,000 per year as result of an agreement with Pitney Bowes Inc.'s mail-services subsidiary.

Before hiring Pitney Bowes to handle all its mail operations last June, Shawmut employed 64 workers in a mail department that processed about 50 million items annually.

Hoping to qualify for the maximum postal-rate discounts, the bank also maintained a contract with a local mail-sorting company, which placed the bank's letters in ZIP code order and embossed them with computer-recognizable bar codes. …

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