A20-03-0015

Commercial Customer Service at Bank One

Introduction
Seven weeks after 44-year-old Jamie Dimon took over as Bank One’s Chief Executive Officer in 2000,
he met with Bank One shareholders. The group barraged him with questions and complaints about
customer service. Clearly, they had more concerns about weak customer service than stock price. What
did he intend to do to improve customer service at Bank One, the sixth largest bank in the U.S.? They
pushed him to move quickly to resolve the problem. He agreed that customer service was a top priority,
along with integration of systems, breaking down bureaucracy, and streamlining operations with a
leaner, meaner bank (Silvestri, 2000).

In early 2000, Midwestern giant Bank One struggled with customer service problems, as well as
rocky financial times. Jamie Dimon identified four immediate priorities for the bank: customer service,
financial discipline, system conversions, and building the management team. The bank made consider-
able progress the first year in building its core and infrastructure, particularly in customer service. It
tracked, measured, and rewarded the quality of customer service. The bank improved service through
better systems and appropriate compensation plans (Dimon, 2001).

Under Dimon’s leadership, the Bank underwent major changes. He cut expenses by $1.8 billion,
16.6%. In 2001, the bank earned $2.6 billion with a return on equity of 13%, in contrast to the $511
million loss the bank suffered in 2000. Bank One’s stock price leaped 34% to $38.

How did Dimon revamp customer service with an emphasis on quality and excellence? How is
Bank One maintaining and improving the quality of its customer service? This case examines customer
service for the Middle Market segment of the Commercial Banking line of business of Bank One’s
Southwest region.

History of Bank One

With headquarters in Chicago, Bank One is the sixth largest bank holding company in the United
States, with assets worth over $260 billion. The bank has 74,000 employees at 2,000 branches in 14
states. The bank is a leading provider of lending, treasury management, and capital markets products to
Middle Market businesses and corporations. The retail bank serves over 7.2 million households.

In 1929, Commercial National and City National Bank of Commerce of Columbus, Ohio, merged
to form City National Bank and Trust. John H. McCoy became president in 1935, starting the family
dynasty. His son, John G. McCoy, took over for him in 1958. When City National hired comedienne
Phyllis Diller to do its radio and TV commercials in the 1960s, it launched her career and made the
bank famous.

Copyright © 2003 Thunderbird, The American Graduate School of International Management. All rights reserved.
This case was prepared by Professor Christine Uber Grosse for the purpose of classroom discussion only, and not to indicate
either effective or ineffective management.
 City National offered the first Visa credit card outside of California in 1966. It also created the
first drive-up bank, and was one of the first banks to use ATMs. Eventually, McCoy formed a holding
company called First Bank Group of Ohio, which became Banc One in 1979. As interstate barriers to
banking fell, the bank moved into Indiana, Kentucky, Michigan, and Wisconsin.

John B. McCoy, third generation of the banking family, became CEO in 1984. During his fifteen
years at the helm, he acquired over 100 banks in the Midwest. He also bought over twenty failed banks
and expanded into Texas in 1989. Two years later, the bank moved into Illinois. After that, it entered
Arizona and Utah, mostly through stock-swap acquisitions. Its first international venture came with a
development alliance with Banco Nacional de Mexico in 1992. In 1996, Banc One purchased Premier
Bancorp, the number three bank in Louisiana. A year later, it added Liberty Bancorp, based in Okla-
homa City. When it bought First USA in 1997, Banc One became the third largest credit card issuer
behind Citicorp and MBNA.

Bank One was formed after a $29 billion merger in 1998 between Banc One of Columbus, OH
and First Chicago NBD. Banc One had a large retail operation located primarily in the Midwest and
Southwest. In contrast, First Chicago NBD’s strength lay in its long history of corporate lending to
medium-sized manufacturers. The combined Bank One was 40% owned by First Chicago stockholders
and 60% owned by Banc One. First Chicago NBD had most of its business in Chicago and Detroit.

When acquiring banks to add to Banc One’s portfolio, McCoy usually let the local managers stay
on and continue running the bank the way they had in the past. He avoided centralizing the manage-
ment of his new acquisitions. When Banc One and First Chicago NBD merged, he believed it would be
a merger of equals, and agreed to move the new bank’s headquarters to Chicago (Weber, 2000).

After the merger, questions raged over who was in charge. Both sides battled over whether retail or
corporate should get the resources, and who should manage the businesses. Both banks resulted from
multiple mergers of the past, where neither exerted strong central controls over the merged banks (see
Figure One). As a result, regional practices prevailed. Wanting to grow revenues quickly, the bank took
on too many risky loans to large corporations (Tully, 2002). The stock lost half its value in two years.

Adding to the problems was First USA, the credit card operation that Bank One bought for $8
billion in 1997. Soon after the merger, First USA abused its customers by increasing rates 4.5% to
19.9% if they paid a day late only twice within six months. Large numbers of customers fled (Tully,
2002).

Bank One’s board asked Jamie Dimon to take over as CEO in 2000. Mr. Dimon came to Bank
One after serving as President of Citigroup Inc., and Chairman and Co-CEO of Salomon Smith Barney
Holdings Inc. Dimon was a tough, loud, charismatic New Yorker. People characterized him as a manic,
whirling dervish who was into everything (Tully, 2002). His hands-on style shook up the staid Mid-
western bank and made things happen.

He inherited a badly managed, poorly organized bank, and energetically set to work to turn the
bank around. One of the first things he did was buy two million shares of Bank One stock, investing
$56 million, half of his personal fortune. He wanted to lead the bank with his own money on the line.

Dimon eliminated about 8,000 jobs in his first year on the job, cutting the workforce to 75,800.
He scaled back an auto-leasing unit. He closed Wingspan, the online bank launched two years previ-
ously. The venture cost the bank between $100 and $150 million during its first year alone (Epper
Hoffman, 2002). Eventually, Dimon replaced twelve of the top thirteen executive managers at the bank.
He hired former Citigroup Chief Financial Officer (CFO) Heidi Miller to take on that same job at
Bank One.

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 Bank One succeeded in getting back many First USA credit card customers by putting money
into marketing and customer service. In 2001, new managers got rid of about seven million inactive
accounts at First USA and cut the number of new accounts that were opened (Weber and Popper,
2001). Attrition declined from a dismal 20% to about 10%, the industry average. Earnings, which
hovered around zero in 2000, reached $946 million in 2001. In the meantime, the company bought
Wachovia’s consumer credit card portfolio, adding about 2.8 million customers.

One of the worst nightmares that Jamie Dimon faced at Bank One was the twisted mix of com-
puter systems left over from dozens of mergers with regional banks. The Bank had to blend seven
deposit systems, and worked hard to avoid service problems that could frustrate customers to the point
of leaving. Bank One’s goal was for customers to receive services seamlessly and efficiently, no matter
where they were or what their banking needs (Cawthon, 2001). Dimon insisted on integrating the
diverse systems into one platform. Slowly, painfully, the bank underwent conversions to one unified
system, state by state. The conversions required a huge effort that many at the bank thought was impos-
sible. But as Dimon noted, “Unless the computers talk to each other, you can’t do acquisitions. You can’t
build a great bank.” (Tully, 2002).

Dimon required worst-case scenario planning after analyzing the major weaknesses of Bank One.
He stated, “You don’t run a business hoping you don’t have a recession!” (Tully, 2002). As a result, the
bank assessed the profitability of each loan on its books. Domestic Corporate Banking chief John E.
Neal reviewed a list of about 1,800 borrowers and gave warning to those whose loans might not be
renewed. Many cheap loans were losing the bank money. The bank offered these commercial customers
the opportunity to purchase other products (such as asset management, treasury services, derivatives,
and bond underwriting) from Bank One, or find another bank. In this way, their relationship became
profitable for the Bank, or they left.

Where did Dimon come from? Jamie Dimon graduated from Harvard Business School and began
working in 1982 for Sandy Weill, who was his father’s boss at Shearson Haydon Stone (Kurson, 2002).
Weill sold his brokerage firm to American Express and later became president of Amex. After a fight
with CEO James Robinson, Weill left the company with his protégé, Dimon.

Subsequently, Weill took over Commercial Credit in Baltimore, a $4 billion-a-year insurer and
lender that made high interest loans to factory workers, nurses, and miners. Most of his management
team left big jobs at corporations and hated bureaucracy. They were nonconformists who wanted to do
things differently. The family-style atmosphere at work was boisterous. Dimon and Weill often screamed
at each other, but formed a partnership that lasted for 16 years. Together, they grew a powerful broker-
age, investment-banking and insurance kingdom.

In 1993, Commercial Credit bought Primerica Financial Services Group, which included Smith
Barney. Next they acquired Shearson Lehman Brothers and Travelers Insurance Group. In 1997, they
took over Salomon Brothers. All the while, they practiced conservative, solid management, looking for
deals when prices were low, as in economic slowdowns. They watched their balance sheets and cut costs
continuously. Weill was the strategist; Dimon executed brilliantly.

Travelers merged with Citicorp in 1998 and became Citigroup, the largest global financial ser-
vices organization. But the two leaders had a falling out, and Dimon was ousted by his own mentor,
Weill (Weber, 2001). Much of what he learned from Weill about saving troubled companies he applied
to Bank One.

Changing Culture
Under Dimon’s leadership, Bank One’s culture underwent important changes. In his letter to the stock-
holders in the 2001 Annual Report, he noted that employees were acting with greater openness, pas-

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sion, and urgency. Dimon encouraged employees to ask questions and solve problems. At a recent rally
at Bank One’s Chicago headquarters, Dimon asked the group of 500 employees, “How many people
think we are slow and bureaucratic?” A number of employees raised their hands. So he asked, “Who is
responsible for fixing what is bureaucratic?” “We are,” the audience shouted back (Tatge, 2002).

To help reduce bureaucracy, Bank One implemented a Bureaucracy Busters Program, an online
suggestion box that paid employees for money-saving ideas. In 2002, the Bureaucracy Program was
renamed The Idea Center to encourage more suggestions on how to improve the bank’s internal pro-
cesses. In response, employees sent in thousands of recommendations, and the Bank put many of them
in place.

Management centralized its operations and sought to give people in the field more authority and
responsibility. It increased the feeling of ownership in the company by giving a grant of $300 in Bank
One stock to the 401(k) plans of almost 40,000 of its lower-paid employees. Employees at 1,800 branches
were given the opportunity to share profits if they met earnings targets (Tatge, 2002).

Dimon also encouraged teamwork across and within business lines to the point that Corporate
Bankers began joining Investment Managers on customer calls.

Dimon’s culture of integrity pervaded the bank. Arthur Leavitt, former chairman of the Securities
and Exchange Commission, says, “Jamie Dimon is the un-Enron”! (Tully, 2002). In the industry (US
Banker, 2001), integrity is widely recognized as the hallmark of Jamie Dimon’s management style.
Warren Buffett was so impressed by Dimon’s Letter to the Stockholders in the 2000 Annual Report that
he wrote Dimon that it was one of the best he’d ever seen.

Organizational Structure of Bank One

Bank One’s Commercial line of business operated in fourteen states in four regions: the West, South,
Midwest, and East. The South region included Louisiana, Oklahoma, and Texas; while the West cov-
ered Arizona, Colorado, and Utah. The Midwest consisted of Illinois, Indiana, and Wisconsin, and the
Eastern region covered Kentucky, Michigan, and Ohio.

Bank One’s main lines of business included investment management, retail, commercial, and
credit card (see Figure Two). The bank defined small business as one with annual revenues of $10
million or less. Commercial customers had annual revenues of over $10 million. The Bank’s Commer-
cial line of business was divided into Middle Market and Corporate. Middle Market customers gener-
ally ranged from $10 million to $500 million in annual sales, while Corporate customers ran over $500
million. The Middle Market group serviced depository accounts (checking and savings and all varia-
tions), treasury management products, capital market products, and commercial loans.

Competitors in the Southwest Region

Bank One had many different competitors, depending on the market. The competitors of Bank One in
the Southern region’s Commercial line of business varied according to the market. For example, the
competitors in Louisiana were local banks such as Whitney National Bank and Hibernia. In Dallas, the
competitors were Chase, Bank of America, Wells Fargo, and Comerica. In Oklahoma, major competi-
tors included Bank of America, Bank of Oklahoma, and Bank First.

Customer Service in the Banking Industry

Tiering of customers was gaining popularity in customer service in the banking industry. For example at
All First Bank in Baltimore, only top customers had phone access to a service agent. Less-profitable
customers did not have that option.

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 Credit card customers at First Union were coded with small colored squares that flashed when
Service Consultants brought up their accounts. A green square told the representative that the customer
was profitable and should be given special attention and care. Red meant that the customer lost money
for the bank and had little power to negotiate. Yellow represented a discretionary category somewhere in
between (Brady, 2000).

Since banks had some of the biggest gaps in customer profitability, tiering of customers was attrac-
tive. According to Gartner Group Inc., 68% of banks with over $4 billion in deposits divided customers
into segments based on their profitability for the bank. Market Line Associates estimate that the top
20% of most Commercial banks’ customers produce up to six times the revenue that they cost. The
bottom fifth often cost three to four times more than they generate for the bank (Brady, 2000).

Banks that use tiering run the risk of failing to measure the true potential value of a customer.
Tiering usually is based on past transactions. The programs used to tier typically are not capable of
collecting information from different business units within the company.

Commercial Customer Service at Bank One

Over the first two years of Dimon’s leadership, Bank One’s customer service has steadily improved.
How did the bank bring quality back to its customer service?

One of the most important characteristics of a service consultant is a sincere desire to help people.
This related to Jamie Dimon’s belief about what it takes to make the Bank succeed. Dimon told a crowd
of systems analysts, loan officers, and branch managers in Chicago, “Winning isn’t about patents or
your IQ or where you went to school. It’s about one thing—how much you want it!” (Tully, 2002). To
Dimon, desire to do the job well is critical to success.

Another key to excellent customer service was teamwork. Customer Service Consultants needed
to work closely with people in other areas of the bank to resolve problems.

Bank One developed strategies and guidelines to help employees maintain and improve service
quality. First, the bank made a promise to its customers and employees concerning its commitment to
service.

Bank One promised its 60 million customers that they would receive individual answers to their
requests and inquiries.

Bank One developed Service Essentials in fall 2000, recognizing that the overall quality of the
experience keeps customers coming back. It identified the following customer needs:

• Accuracy
• Quick response time
• Fast problem resolution
• Proactive, empowered, knowledgeable, trustworthy employees
• Personal attention

Structure of Commercial Customer Service

How is commercial customer service structured at Bank One? Each market has a Service Manager and
Service Consultants who work with the Underwriters, Bankers, Treasury Management Sales Officers,
and Division Managers.

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 In addition to the local Service Consultants in each market, Bank One has Service Centers in
Milwaukee and Chicago that handle calls from Middle Market customers nationwide. Customers usu-
ally prefer to receive help from a person in their own city. However, the national Service Centers have
longer hours, from 7 a.m. to 7 p.m. Central time.

Recognition for Outstanding Customer Service

Bank One recognizes service excellence in several ways. For example, the national Commercial Client
Services Recognition Program rewards the achievement of the Service Consultants in Middle Market,
Large Corporate, and the Service Centers. The program began on January 1, 2000, to reward employ-
ees, who received engraved recognition plaques with emblems to reflect their individual achievements.
Among the 26 emblem categories were Service Star, Best Overall Service Star, Sales Star, Client Ap-
plause, Leadership, Fraud Detector, and Lemons-2-Lemonade. Emblems were awarded monthly, quar-
terly, and annually, depending on the emblem criteria. The emblems were earned by course completion,
supervisory, customer and business partner recognition, as well as peer and team nominations.

Service Excellence E-cards were launched in March 2002 to provide an avenue for employees to
show their appreciation to internal colleagues and external customers.

The Commercial Banking Senior Management Recognition program sent a complimentary let-
ter or memo from an Executive Vice President to employees in Commercial Banking who had received
written compliments from internal or external customers.

Corporate Service Excellence began the Service Heroes program to celebrate service and spotlight
employees who provided outstanding service to internal and external customers.

Quality Improvement Measures

Under Dimon’s leadership, Bank One implemented a variety of measures to monitor and continuously
improve customer service. These ensured that any issues were resolved to the customer’s satisfaction,
and included customer care reports and conference calls, performance reports, monthly customer
satisfaction surveys, and business won and lost surveys.

Challenges in Customer Service

The two greatest challenges in maintaining quality service are technical knowledge and teamwork.
Service Consultants were required to upgrade their technical knowledge often since the bank’s products
and services change frequently. In addition, consultants used many different systems in a typical day to
access information, since many banking products use different software for deposits, loans, and infor-
mation reporting. Customer Service Consultants had to be familiar with many parts of the bank as they
navigated the different systems. Teamwork was vital since customer issues often crossed over into other
lines of business. Service Consultants had to depend upon people in other areas of the bank to help
resolve any problem.

Future Directions in Commercial Corporate Service

Bank One made tremendous strides in improving customer service after 2000 when Jamie Dimon took
over leadership of the bank. To continue building quality into customer service within the middle
market, the bank could develop the three following areas: (1) empowerment of service consultants; (2)
professionalization of customer service; and (3) customer service technology.

Efficiency would improve with the empowerment of service consultants. The bank needed to
increase the limits on transactions that the consultants could complete, as well as increase their au-
tonomy in problem resolution.
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 The service consultant job needed to be viewed within the bank more as a professional position.
In many markets, consultants dressed business formal rather than business casual. They dressed as
professionally as other members of the relationship team, thus distinguishing themselves by the way
they performed, and not by the way they dressed.

Bank One also needed technology that was specific to customer service. They needed a front-end
system that would allow them to access information, without having to go through different program
applications. New technology was being developed in phases.

Another needed technology was one to give customer service consultants the ability to do call
tracking. This would allow service consultants to see what was done previously for a particular cus-
tomer and track how often the customer had called.

Bank One went a long way in raising the quality of its commercial customer service between 2000
and 2003. How can it maintain the momentum and continue to improve service?

References
Bank One. Media General Financial Services. World’Vest Base for fundamentals; Hoover’s Inc. for
background company information.
Brady, Diane. “Why Service Stinks.” Business Week. Oct. 23, 2000.
Cawthon, Raad. “Creating IT Harmony for Bank One. Bank Technology News. Vol. 14, 7, p. 8. July
2001.
Dimon, Jamie. “Letter to Shareholders.” Bank One Annual Report 2001.
Epper Hoffman, Karen. “No Safety Net.” Bank Technology News. Vol. 15, 5, p.26. May 3, 2002.
Kurson, Ken. “Jamie Dimon Wants Respect.” Money. Feb. 2002.
Moyer, Liz. “John McCoy Left Bank One with $10M Gold Parachute.” AmericanBanker. Vol. 165,
54, p. 6. Mar. 20, 2000.
Murphy, Tar. “Dimon Successfully Shakes Up Bank One.” Forbes Magazine. March 18, 2002.
Silvestri, Scott. “Bank One Shareholders Gripe about Service.” AmericanBanker. May 17, 2000.
Tatge, Mark. “Rough-Cut Dimon.” Forbes Magazine. May 13, 2002.
Thomson Financial Inc. “A Rare Commodity.” US Banker. Vol. 9, 14, p. 111. Sept. 3, 2001.
Tully, Shawn. “The Jamie Dimon Show; He’s Tough. He’s Loud. He’s Irrepressible. He’s Above
Reproach.” Fortune Magazine. June 22, 2002.
Weber, Joseph. “Bank One, Take Two.” Business Week. Oct. 29, 2001.
Weber, Joseph. “The Mess at Bank One.” Business Week. May 1, 2000.
Weber, Joseph, and Margaret Popper. “Can Jamie Dimon Win at Cards?” Business Week. April 23,
2001.

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 Figure 1 History of Bank One

Bank One
Corporation

Banc One Corporation First Chicago NBD Corporation

- Union Savings & Trust Company, founded 1812
- Winters National Corporation, founded 1815
- The Marine Corporation, founded 1839
- American Fletcher Corporation, founded 1839
- Barnitz Bank, founded 1850
- Marine Corporation of Springfield, founded 1851
- Liberty National Bancorp, founded 1854
-City National Bank & Trust Company, founded 1866
-The First Huntington National Bank, founded 1872
- Team Bank, founded 1873
- Affiliated Bankshares of Colorado, founded 1874
- Premier Bancorp of Oklahoma, founded 1882
- Liberty Bancorp of Oklahoma, founded 1895
- Valley National Corporation, founded 1899
- MCorp Bank, founded 1918
- Firestone Bank, founded 1918
- First Commerce Corporation, founded 1933
- Valley Bank & Trust Company, founded 1948
- First USA, founded 1985
-Wayne State Bank, founded 1854
- The First National Bank of Chicago, founded 1863
- INB Financial Corporation, founded 1883
- Gainer Corporation, founded 1885
- First National Bank of Plymouth, founded 1871
- Midwest Commerce Corporation, founded 1872
- Genesee Merchants Bank and Trust Company, founded 1872
- Gary-Wheaton Bank, founded 1874
- Metropolitan National Bank, founded 1884
- Wolverine State Bank, founded 1887
- Winnetka State Bank, founded 1894
- West Michigan Financial Corporation, founded 1895
- Roscommon State Bank, founded 1907
- Peoples State Bank of Belleville, founded 1913
- Union Bancorp, founded 1916
- American National Bank, founded, 1928
- National Bank of Detroit, founded 1933
- Ravenswood Financial Corporation, founded 1933
- Lake Shore Bancorp, founded 1943

Source: Bank One Web site, www.bankone.com

Figure 2 Bank One Lines of Business

Investment Management Group Retail
Portfolio Management Checking and Savings Accounts
Mutual funds Consumer Lending
Financial Planning Small Business Banking
Brokerage Debit/ATM Cards
Private Client Services Investment Accounts
Corporate and Personal Trust Credit Cards
Alternative Asset Management Insurance
Insurance Auto Loans and Leases
Retirement services Online Banking
Securities Lending Home Loans
Custody and Master Trust
Credit Card
Commercial Credit Cards
Global Cash Management Affinity Cards
Commercial Lending Rewards Cards
Loan Syndications Smart Cards
Commercial Cards Stored-Value Cards
Investment Management Business Cards
Asset-Backed Finance
Investment Grade Securities
Derivatives
Foreign Exchange
Global Trade

Source: Bank One Web site, www.bankone.com

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