Bank One Jamie Dimon Is the CEO

Bank One

Jamie Dimon is the CEO of Bank One and has been on the job for a few months. He has completed his first 100 days with the company and is now set to initiate a long-term turnaround strategy. In the first 100 days, Dimon met with managers from across the bank's different businesses and units in order to learn the problems that the company is facing. The purpose of this report is to analyze the current situation facing Dimon and Bank One, first by identifying the issues the company is facing, and then conducting an analysis of the key internal and external factors.

Dimon must address a number of different problems at Bank One. The commercial banking group is a mess, described as a set of "fiefdoms." There is no cohesion within the group. The incentive system emphasizes growing the loan bank, but not profitability. The commercial banking group uses a proprietary risk assessment system, and this has not performed well. This group lacks leadership. The investment management group is strong, but a relatively small part of the company. Retail banking suffers from poor documentation, which makes it difficult to assess risk. The auto loan business is in trouble due to bad credit and declining auto prices. Auto lending puts the bank in competition with automakers, who can use financing as a loss leader, something that drives down revenues and margins for banks involved in the business. Bank One has two online banking platforms, and that creates needless duplication. First USA is bleeding customers, for a number of reasons including payment processing issues, low customer satisfaction, and intense competition. The company's IT strategy is a disaster, with no centralized planning. Each group makes its own IT decisions. Bank One also lacked proper mechanisms for tracking performance. Expense control, therefore, is difficult.

Dimon faces a number of broader strategic issues as well. The company needs cash, and needs to cut its dividend as well as costs. Bank One needs to improve revenues. Dimon must decide on writedowns, and must bring all of the employees on board with the changes so that the turnaround goes as smoothly as possible.

3. Bank One has a number of strengths from which it can build. It is the nation's fifth-largest bank, and has a large customer base. The company's retail position is strong, with a large footprint in the Midwest and the South. This provides deposits and revenues that are critical to the business. The investment management group is strong. These are not sources of sustainable competitive advantage; but they are underlying strengths that are necessary for a bank to succeed.

Bank One faces many weaknesses. The IT situation is a debacle, with multiple competing platforms. This affects both the company's cost structure and its ability to serve customers. Bank One's management team engages in turf wars, over a number of different issues. Many retain loyal primarily to their former employer, rather than to the Bank One group. The call centers and other elements of customer service are not meeting customer's needs. The operations are inefficient, and this is taking its toll on the customer base. First USA is bleeding customers, a combination of poor service and high rates.