OUTSOURCING AN ENTERPRISE IMAGE ARCHIVE A case study

OUTSOURCING AN ENTERPRISE IMAGE ARCHIVE A case study with Hudson River Bank & Trust Chris Redvers, JPMorgan Chase Bank Tracey Pollard, Hudson River Bank & Trust February 22, 2004 ABA National Conference for Community Banks

JPMorgan Chase Bank • Who I am: - Chris Redvers - VP of Business Development in i-VAULT! Group - Today’s objective - review key issues involved in selecting an enterprise image archive • Who we are: - JPMorgan Chase Bank - $638 billion in assets - 747 branches, primarily in New York and Texas - Multiple mergers over the last 20 years - JPMorgan offers outsourced image archive solution: i-VAULT! 2

Introduction • Imaging is broadly accepted within check environments - High volume + homogeneity = productivity benefits. • Outside checks, tracking physical and electronic records remains an ongoing challenge! • Several factors are leading banks to consider application of imaging beyond checks. 3

Agenda Introduction Why Image Beyond Checks? Issues with Enterprise Archive Approach Case Study: Hudson River Bank & Trust 4

Why Image Beyond Checks? • Revised perception of disaster recovery - 9/11/01 • Increased focus by regulators and compliance officers - East Coast Blackout • Impact of not being able to access systems and files - Corporate Governance • Enron, Tyco, Worldcom - New Regulations • Patriot Act, Sarbanes Oxley 5

Why Image Beyond Checks? Revised perception of Disaster Recovery 6

Why Image Beyond Checks? • Revised perception of Disaster Recovery • Risk of losing records - Lost productivity - Impact on customer service - Financial exposure 7

Why Image Beyond Checks? • Revised perception of Disaster Recovery • Risk of losing records - Lost productivity - Impact on customer service - Financial exposure • Potential candidates for digital archiving - Loans, Legal Agreements, IRA Documents, Board Minutes, Employee Records, Signature Cards • stored physically, multiple people need access, important 8

Why Image Beyond Checks? • Revised perception of disaster recovery • Risk of losing records • Benefits of online access - Increased Productivity - Improved Customer Service 9

Why Image Beyond Checks? • • Revised perception of disaster recovery Risk of losing records Benefits of online access Imaging technology more affordable 10

Why Image Beyond Checks? • • • Revised perception of disaster recovery Risk of losing records Benefits of online access Imaging technology more affordable Cost of on-site/off-site physical storage 11

Why Image Beyond Checks? • • • Revised perception of disaster recovery Risk of losing records Benefits of online access Imaging technology more affordable Cost of on-site/off-site physical storage Economies of scale from centralized archiving Ø Convergence of factors favors use of imaging beyond checks 12

Agenda Introduction Why Image Beyond Checks? Issues with Enterprise Archive Approach Case Study: Hudson River Bank & Trust 13

Issues with Enterprise Archive Approach • Cost justification • Analyze potential benefits: - Productivity savings? Customer service enhancements? Reduced risk exposure? Resource implications? Evaluate existing record management systems • Hint: many of the benefits are difficult to quantify 14

Issues with Enterprise Archive Approach • If decide to proceed, various factors to consider: - Implementation timeframe - Up-front capital expenditure Ongoing support costs Maintaining security Maintaining performance Disaster recovery Technology obsolescence 15

Buy or Build? • Benefit of Building In-House - Enables owner to retain control over performance, security and development and avoids reliance on third-party provider • Benefit of Outsourcing - Enables third-party specialist to deliver performance, security and development at a cost-effective price 16

Regardless of Buy or Build • Long-Term Investment and Commitment - Get buy-in across departments • Economies of scale • Integration • Importance of choosing appropriate technology partners - ‘Build’ costs are often under-estimated • Importance of technology obsolescence • Importance of long-term support and development 17

Advantages of Enterprise Approach • Consistency • Integration • Economies of scale - bigger and better • i. e. , full business continuity vs. offsite backup • Easier to control and support • Reduce costs through system consolidation • How much resource to devote? - Adopt internal archiving competence - Or outsource to gain that expertise 18

Enterprise Archiving at JPMC • JPMC opted to build in-house - Used large internal clients to justify expenditure - Developed expertise implementing internal clients - Compliance officers, regulators and business owners demanded high-level security, business continuity and fast retrieval • i-VAULT! - Dual, hot-site infrastructure Long-term, online retrieval Used by over 50 departments within JPMC Over 200 external clients 19

Enterprise Approach - Summary • Several factors favor imaging beyond checks - DR, storage costs, insurance, productivity, customer service • Multiple benefits from adopting enterprise archive - integration, consolidation, economies of scale • Key issues to consider - Buy or Build? - Expensive and involved - Long-term undertaking - Cost of doing nothing? 20

Agenda Introduction Why Image Beyond Checks? Issues with Enterprise Archive Approach Case Study: Hudson River Bank & Trust 21

Hudson River Bank & Trust • Who I am: - Tracey Pollard - Director of Loan Servicing • Who we are: - Hudson River Bank & Trust - $2. 5 billion in assets - 50 branches in central New York state - 3 acquisitions since 1999 - Acquired imaging system in 2001 22

How Hudson River encountered i-VAULT! • Hudson River’s President, Carl Florio, is on the board of the New York Community Bankers Association • In March 2002, the Association endorsed i-VAULT! as the preferred imaging archive for New York member banks • By coincidence - Hudson had recently acquired Cohoes Savings Bank - Cohoes already had an imaging system for loan files - We were considering our imaging options • Mr. Florio asked us to compare i-VAULT! with the Cohoes system 23

i-VAULT! versus Cohoes • Cohoes system - Images stored on in-house jukebox - Software-based retrievals from dedicated PCs - Limited to 4 index fields - No data backup - Provider no longer supporting platform 24

i-VAULT! versus Cohoes • Cohoes system - Images stored on in-house jukebox - Images retrieved through software loaded on dedicated PCs - Limited to 4 index fields - Provider no longer supporting platform • i-VAULT! - Fast, user-friendly, online retrievals - Full disaster recovery - Unlimited users - Strong business partner - No risk of technology becoming outdated - Increased security 25

Implementation of i-VAULT! • Based on the comparison, it was an easy decision • The Implementation process was key - Determining the correct index fields • We leveraged indexing experience of JPMorgan • We initially loaded loan and IRA documents • Currently implementing Signature Cards • Other applications planned in 2004…… - Finance, Human Resources, Vendor Contracts, Trust 26

Key Learning Points • • There are many imaging solutions available Crucial to choose one with ongoing support and development Important to get internal buy-in on system requirements Identify right index fields during implementation process - “garbage in, garbage out!” Biggest implementation headache was setting up scanning stations - Up-front cost, reassigning labor resources Increased productivity in Loan Department has been significant - enhanced customer service Feedback from internal users has been very positive Feedback from auditors and regulators has also been positive 27

Conclusion This concludes our prepared remarks and we are now ready to receive any questions from the audience Questions Chris Redvers, JPMorgan Chase Bank Tracey Pollard, Hudson River Bank & Trust February 22, 2004 28