Citi
wanted to create interactive timelines specific to their relationships with
important clients. One such client was IBM. For this project, I was charged to do original research, select relevant moments in the shared histories of the two companies, and write them up. The capsule pieces included year, headline, subhead, which was how the items were tagged on the timeline.
1926
Thomas J. Watson
Sr. opens a bank account
A long and happy
business partnership began in January 1926
A
long and happy business partnership began in January 1926 when IBM's founder
and president Thomas J. Watson Sr. opened his company's first account with the
National City Bank of New York.
"Thanks
ever so much for doing this," wrote National City Bank's 40-year-old
director Gordon S. Renschler in a warm letter dated January 21, 1926. "It will
be good to think of doing day-in-and-day-out business with you again."
IBM's
relationship to its new bank would soon grow into a partnership of mutual
benefit and innovative flourish. In 1937, well before the computer transformed
both companies, an IBM publication would describe National City Bank's
contribution in "branching out to aid the American business man develop
his markets at home and abroad" by championing various IBM products such
as "International Bookkeeping and Accounting Machines, Proof Machines for
banks, International Time Recording equipment, International Writing Machines,
and International Scales."
One
decade after Watson made his first deposit, National City Bank's Renschler
would recall the moment with gratitude. In a January 1936 letter to Watson,
Renschler wrote: "Ten years ago today we opened on our books the account
of the International Business Machines Corporation, and I do not want to let
the day pass without dropping you a note in this connection. The relationship has
always been a happy one and we look forward to many more years of association
with you and your good company."
1935
National City Bank Comptroller singles out
IBM for praise
Contribution of IBM punch-hole equipment
noted in reducing inefficiency
Rowland
R. Hughes, Comptroller for National City Bank, praised IBM equipment in use at
his bank as a critical component to ensuring fast and accurate record-keeping,
in a speech before the American Institute of Banking in Omaha, Nebraska June
11.
Speaking
on the subject of budget accrual and expense control for banks at the
Institute's annual convention, Hughes noted the "accuracy and
simplicity" of IBM equipment as a factor to achieving efficient operations
in punched-hole accounting. IBM's International Electric and Tabulating
Machines had by this time become integral features at National City Bank's
accounting offices.
"A
good system of accounting is at the same time reasonably permanent and
reasonably flexible," Hughes told the convention audience. "If it is rigid
and unchangeable it sooner or later becomes out of date; if it is constantly
being torn apart and set up on a new basis, the value of comparisons is
lost."
By
the 1930s, National City Bank was one of IBM's biggest customers. In March,
1938, 29 IBM proof machines were being used at 17 different National City Bank
offices throughout New York City. IBM's diversity of punch-hole equipment was
in widespread use at National City Bank departments around the world.
1942
Teaming up to mobilize women
Moving toward gender equality as men go to war
IBM and National City Bank teamed up in 1942 to train women in the use of IBM operating machines, signaling a shift in employment policies at both companies.
The joint training program was
developed to help the companies deal with the loss of traditionally male
workforces to the wartime draft. It represented a profound attitudinal shift in
a relatively short time frame. In 1940, women represented just 23 percent of
the workforce at National City Bank. By the end of 1942, they constituted 43
percent.
Women employed at IBM also found opportunities for advancement. In 1943, Ruth Leach was appointed IBM's first female vice president. "Leaving out the whole question of freedom and rights for women, is it not simply a matter of sound business policy to have in management a substantial number whose impressions, reactions and emotions are most like those of the majority of your customers?"
IBM would grow into one of the most forward-thinking companies in the United States when it came to appreciating the contribution of women. In 1995 IBM created a Global Women's Task Force that led to a 592 percent increase in female executives there. Programs like GM Accelerator were designed to help women advance in the company. In 2010, the National Association for Female Executives named IBM one of the top ten companies for female executives.
1954
IBM
"Electronic Brain" transforms man-hours into minutes
Delivering an
accounting revolution in record time
Nine
and a half minutes was all it took to change perceptions of bank accounting.
That
was the elapsed time from the moment when cost analysis information was fed by
National City Bank officials into an IBM 701 "electronic brain" to when
the early computer produced its first solution. A process that would have
required over a thousand man-hours was reduced to less than 600 seconds.
The
announcement of this successful demonstration was made by National City Bank
and IBM in a joint statement released on February 3, 1954. The problem to be
solved involved the distribution of overhead expenses among 156 National City
Bank departments, a complex and time-consuming yearly ritual for the bank.
The
final success of the experiment with the 701, designed and built by IBM for
defense-industry purposes, amazed those who participated. "The 701 never
even knew this was a bank problem and now it can do the task for anyone,"
an IBM official was quoted as saying about the demonstration.
For
IBM, the 1954 experiment was a leap forward in thinking about business
applications for computers, one that would not wait long to see further
realization. "IBM was able to take the application and apply them to other
businesses," IBM archivist Paul Lasewicz notes. "It proved to be very
useful."
1967
Citibank brings
IBM System/360 to Buenos Aires
Novel use of
System/360 speeds processing at nine Argentine banks
Less
than two years after IBM transformed the business office with the launch of its
System/360 computer, First National City Bank installed one at its Buenos Aires
office in 1967.
The
step was taken to help First National City Bank keep pace with sprawling
business demand in a fast-blossoming South American market. "It has
already replaced conventional bookkeeping for checking accounts and for the Bank's
own payroll for all of its nine branches in metropolitan Buenos Aires,"
First National City Bank noted in its 1967 annual report.
This
was a significant milestone for IBM, too. While it enjoyed relatively fast
acceptance within the United States, this represented one of the System/360's
first steps into the international market. Notes IBM Archivist Paul Lasewicz:
"The System/360 was the product that made IBM what it is today. The
architecture of the 360 mainframe defined computing to the present day. This
would have been a fairly early use of the 360, which was introduced in 1964 and
started getting to customers nationally in 1965-66."
Designed
to manage a range of banking activities, the System/360 offered unprecedented
capability in both speed and memory. Internal memory components holding up to
500,000 characters each and modular disk storage units with individual
capacities exceeding 224 million characters allowed the System/360's tape
drives to process 340,000 alphameric characters a second, and "double
these rates for all numeric."
1979
Big Blue goes for
big green
Unprecedented
capital campaign reshapes world of finance
When
IBM made Salomon Brothers its co-lead manager in 1979, it represented a seismic
shift on Wall Street, a breakthrough in the investment-bank hierarchy. But for
IBM, it was just the start of a massive capital project throughout the world.
Salomon
Brothers, which became a part of Citi in 1998, was charged with "running
the book" for IBM's billion-dollar bond offering that year, the largest in
history. The money was needed for a major expansion and modernization project
that would give IBM the momentum it needed to take on the 1980s and a new era
in business and personal computing.
Dozens
of IBM factories and plants were being retooled or built from scratch, with
four million square feet completed and 11 million square feet under
construction in 1979 alone. Capital spending would jump from $285 million in
1978 to $2.85 billion in 1982.
IBM's
success in raising the money was a first step toward aggressive financing that
would position it effectively for the dawn of the computer age. Before the year
was out, IBM had Salomon working on another envelope-pushing initiative,
raising another $800 million in interest-rate swaps to build on their new,
successful relationship. "As IBM allowed us to advance to the position we
are in, they continue to this day, as most good companies do, to be open to all
kinds of creative thoughts and ideas," said Jon Rotenstreich, a former
Salomon general partner who in 1979 managed the IBM relationship. "And
that's the game."
1988
IBM platform hosts Citicorp banking system
Comprehensive Banking System is introduced
for the AS/400, offering broad computer functionality
IBM
and Citicorp allied in 1988 to bring the banking experience more directly to
computers when IBM's path-breaking Application System/400 was matched up with
special software to create Citicorp's Comprehensive Banking System.
The
only banking system written in database mode, which allowed it to take full
advantage of the AS/400 architecture, CBS would kick off a new phase of the
fruitful IBM-Citi partnership.
The
AS/400 was launched in June 1988 with an array of application products built to
serve such varied entities as schools, law firms, and the hotel industry as
well as banking, the focus of the CBS. The AS/400 Office package integrated
such features such as easy-to-use electronic mail, word processing, directory
and library services, and calendar management, with a relational database that
allowed for easier and more efficient file management.
Also
that year IBM and Citicorp worked together on a consumer-focused banking
program that incorporated an offshoot of the AS/400 called System/88. In June,
1988, Citicorp's CEO John Reed sat down with IBM head John Fellows Akers to
refocus their relationship. The result was the opening of an IBM branch office
exclusively devoted to addressing Citicorp's technology concerns.
Further
achievements in computerized banking lay ahead for both companies.
1989
IBM's C. Michael Armstrong joins Citi
board
Tech business visionary becomes first
member of leadership at both companies
C.
Michael Armstrong, a senior vice president at IBM and chair of its World Trade
Corporation since 1961, was made a member of the Citicorp Board of Directors in
1989. He became the first IBM person to sit on the bank's board.
Widely
credited in the 1980s for helping lead a turnaround of IBM's European
operations, Armstrong's engineering background and proven sales ability were qualities
Citi sought for its own board. Also in 1989, Armstrong was elected chairman of
the board of the IBM World Trade Corporation.
Armstrong
would remain on Citi's board until 2009, the same year Lawrence Ricciardi, a
senior advisor to IBM, joined the Citi Board of Directors, thus continuing the
IBM tradition there.
In
1992, Armstrong retired from IBM to become a chairman and CEO of the Hughes
Aircraft Company. There, later that decade, he expedited development of
DirecTV, one of the first digital broadcast systems.
"Mike
Armstrong has applied his technical expertise, marketing skill, and business
acumen to IBM's success for more than 30 years," IBM Chairman John Fellows
Akers noted in the announcement of Armstrong's departure. "Our business
has benefited from his strong leadership in his many assignments, but
especially in his role as the senior executive responsible for our World Trade
operations."
1997
First secure
credit card purchase done via internet
IBM's new
technology helps Citibank Asia Pacific run first live end-to-end credit card
transaction
An
electronic commerce solution designed by IBM using its CommercePOINT product
line enabled a credit-card purchase to be made entirely through digital
technology April 29, 1997, in Singapore. It was the first such Secure
Electronic Transaction (SET) made in the world, using security-enhancing
digital certification in a live production credit-card processing environment.
The
purchase, of a bouquet of flowers and a gold cup, was made by Stephen Yeo,
chief executive of Singapore's National Computer Board.
The
demonstration kicked off a pilot program with a goal of reaching half-a-million
Citibank customers in the Asia Pacific region by the end of 1998. Citibank,
teamed with both IBM and Visa in this initiative, offered credit-card users the
convenience of shopping via the internet with the security of SET technology.
"We
are pleased to be working with a Web pioneer like Citibank to showcase the
value of Internet technologies to electronic business," said Kent Price,
general manager of IBM's Banking, Finance & Securities Industry, Asia
Pacific. "This latest milestone marks a major step toward providing
customers with secure ways to buy and sell over the Internet."
2002
Citigroup Advises IBM on PwC Consulting
Buy
$3.5 billion purchase of
PricewaterhouseCooper consulting group adds to IBM client service capacity
IBM
completed the purchase of PricewaterhouseCooper's worldwide consulting group,
PwC Consulting, for $3.5 billion in October 2002. Citibank worked with IBM on
its purchase in an advisory capacity.
The
deal, which was signed in July and finalized after approvals from local PwC
firms, was described by IBM president and CEO Samuel J. Palmisano as a way to
provide clients not only with innovative ideas but "a partner with deep
business expertise and the ability to exploit leading, open standards-based
technology to turn these ideas into bottom-line business benefits."
The
new entity, IBM Business Consulting Services, brought together 30,000 IBM and
30,000 transferring PwC Consulting professionals, making it the world's largest
consulting services organization with offices in more than 160 countries.
"This
is an exceptionally good fit - both strategically and culturally," noted
Doug Elix, senior vice president and group executive at IBM Global Services.
"Our businesses complement each other and we speak the same
language."
2012
IBM, Citi launch IBM Watson program
Companies work together to streamline and
enhance computerized banking
Citi
entered into an agreement with IBM on March 5 to work with IBM Watson, the
breakthrough artificial-intelligence computer, to simplify and improve the
banking experience.
With
deep-content analysis, decision support, and evidence-based learning, IBM
Watson is seen as an ideal tool for better understanding the banking
experience. Citi will use it to assess ways of delivering a first-of-a-kind
customer interaction solution.
"We
are working to rethink and redesign the various ways in which our customers and
clients interact with money," said Don Callahan, Citi's Chief
Administration Officer and Chief Operations & Technology Officer. "We
will collaborate with IBM to explore how we can use the Watson technology to
provide our customers with new, secure services designed around their
increasingly digital and mobile lives."
IBM
Watson is designed to accurately extract facts and quickly understand
relationships by organizing and processing large volumes of data. With four
terabytes of disc storage and the capability of answering questions posed in a
natural human language, IBM Watson is considered at the forefront of computer
technology. It astounded the world by winning the television game show
"Jeopardy!" against two past champions.
As
Mike Rhodin, Senior Vice President of IBM Software Solutions, noted: "The
collaboration between IBM and Citi will explore how applying Watson in the
consumer financial market could help empower financial professionals to make
better business decisions and represents a significant step in delivering on
the promise of personalized banking in the 21st century."
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