News Release (USCIB): Tuesday, November 26, 1996 Banks Making Sweeping Changes in Operations to Meet Challenges of International Markets Study finds international banks applying mix of reengineering and new technology to improve operations. In an effort to reduce costs and boost productivity, international banks are reengineering their operations departments and updating technology at increased rates, according to a two-year study of top international banking operations officers conducted by the U.S. Council on International Banking (USCIB) and the USCIB Foundation. Operations departments, which generally maintain activity other than retail banking or customer service, are becoming increasingly critical in international banking, due to the explosive growth of transnational business and the convergence of commercial and investment bank activities. Such industry developments have left many corporate clients looking for "one-stop shopping" for their banking matters as an easier way to meet their financing needs. At the USCIB Annual Conference in mid-November, it was noted that banks are going to have to employ more agility in order to satisfy their corporate clients' escalating demands for simplicity. The increasing cost of running an operations department is also forcing executives to take a sharper look at where they can trim their budgets. According to the USCIB study the annual operations department budget is now $ 15 million, compared with $ 9 million in 1995, an increase of more than sixty-six (66%) percent. In more than half (52%) of the operations departments surveyed, labor costs accounted for fifty (50%) percent or more of their budgets. To reduce costs, executives have turned to reengineering and downsizing. Thirty six (36%) percent have reengineered their departments, and of those, sixty-three (63%) percent reported the action had reduced costs and improved productivity. Nearly one-half (49%) of operations executives have either downsized their departments in the past year or plan to in the one to come. In addition, all of the executives surveyed plan to invest in technology over the next 12 months in order to speed up operations and handle the increase in international transaction banking. Ninety-six (96%) percent of respondents say they will invest in technology, up from eighty-nine (89%) percent in 1995. Just under half of surveyed operations departments use a technology system that is over three years old, and sixty-three (63%) percent of prospective buyers expect to spend more than $100,000 to replace or upgrade aging equipment in the next year. The U.S. Council on International Banking (USCIB) is a national association representing more than 320 U.S. and foreign-based financial institutions with operations or subsidiaries in the United States. One of the oldest U.S. banking associations, the USCIB works to standardize international banking rules and practices, serves as advocate to U.S. and international regulatory bodies on policy issues that affect its membership, and provides training and information to bankers throughout the United States. This study included 55 of its members and other executives and was conducted in late July and August, 1996.