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Global Holding & Investment Company

Global Holding & Investment Company

Global Holding & Investment Company is a retail consumer finance business founded 17 years ago in what was essentially a different technological era. President and CEO Joe Jones discusses how WebSphere has helped to transform his business from a paper-based company to a sleek automated firm poised for exponential growth over the next few years.

The Company
GH&I specializes in the financing of consumer items, with a market niche in consumer goods typically priced below $4,000 and paid for in installment plans over a period of time ranging from 6-36 months. GH&I finances the purchase of household appliances, furniture, and other durable consumer goods that are bought with a small down payment and then paid for on a monthly basis.

"What we do is to step in to finance the transaction - we basically buy the paper or fund the paper to the merchant or retailer that's selling the merchandise so they can replace their inventory," says Jones. "We send a payment book out to the consumer and the consumer makes their monthly payments to us. Essentially we take out the middle man so the customer doesn't have to go to a credit card company or to a bank to borrow financing."

"Our subniche in the marketplace is actually buying credit risk paper - paper that's been priced at credit risk according to the previous credit history of each individual borrower," Jones says. "We buy paper - what we call loans - across the country. Over the past 17 years we've built a sizable portfolio with a well-diversified product base."

The average loan in the GH&I portfolio is about 24 months with a balance of about $2,000. The company services all of its loans in-house, including all of the collection work, loan-tracking and origination, and legal work. In addition to its consumer lending business, which serves 30 states, GH&I has a consumer retail mortgage department that handles first and second mortgages, home equity loans, and home improvement loans for homeowners in the New York and New Jersey areas. The third arm of the company is their collection department, which in addition to handling in-house loans, also takes on third-party collections for outside retailers that are having difficulty with their own collections.

Technological Background
The technological end of the business has radically changed in the years since Jones founded GH&I. "When we opened Global originally, we used to draw a circle in the sand and we would put rocks in the middle to keep track of what loans we had or didn't have," he recalls. "Essentially, everything was done on paper. Loan balances were kept on paper; account ledger sheets were all kept on paper - and tracking the loans was a monumental task, where piles of paper would move from one side of the desk to the other side of the desk and from one person's desk to another desk.

The purchase of the company's first computer was a major investment. "It was a 286 computer that was put out by some local company here and we thought it was going to automate our business and eliminate all of our paper and tracking problems," Jones says. "We were running Lotus, back in the days prior to Windows. We were running the DOS version of Lotus and everything was backslash file retrieve, and I remember we were excited because we had a half MB of RAM in the unit and we thought we were going to fly."

GH&I has increased its investment in technology quite substantially since then, adding a PC here and there and eventually networking all of its computers together. Today the company runs a series of networks in its office. One platform is running a Unix/Linux system and the other is running a Windows NT system supporting the entire staff. "Without the advancements in technology we could never be as efficient as we are today with respect to servicing our loans," Jones says. "We now have the ability to track loans live on our screen. Moment to moment, we're able to know exactly what our balances are, where we're going, how to adjust any type of collection needs that we have. Any type of action that needs to be done can be done live at this point."

WebSphere's Role
Improved efficiency was the first noticeable impact of migrating to WebSphere, Jones says. "In the first obvious impact, it allowed us to tie applications together that were kind of scattered, so we were able to share data more efficiently. And sharing the data gives us the ability to analyze it from different perspectives, allowing us to make more efficient management decisions," Jones says.

WebSphere allows retailers to access GH&I's Web pages to transmit and access data in a secure live environment. "So if they have a consumer in the store, they can get to us live in a matter of seconds, have an approval, and documents print out right from their PC - instant approvals," Jones says.

"Workflow is the name of the game in our business, Jones says. "We receive literally hundreds and hundreds of applications a day from all across the country. When the application or the paperwork is sent to us, we have to kind of live with it from what we call 'womb to tomb.'"

When an application enters the office, it is entered into GH&I's main system and into a loan-tracking system that allows the company to give the merchants live access to the status of their loans. A merchant can come online at any given time and see the status of any of their loan applications.

"All of that is running on WebSphere," Jones says. "Once we've approved the loans we're then able to take all that data and move it to our loan servicing department, which runs on a Unix-based system that tracks all of the payments, due dates, the history of the account, the performance of the account, as well as storing crucial variables on each and every client so we can do certain types of regression analysis - looking to see who's paying, why certain activities are working better than others."

"The business logic is completely automated - we couldn't do it any other way," Jones says. "I don't believe that we can just sit down with automation and figure out mathematically who's going to pay a loan and who's not. What the system does for us is give us the data that we need in order to make intelligent strategic decisions," he adds. "Our business now, from the time a loan comes in until the time it's paid off, is all automated. Every step of the process is trackable and traceable. We can pull any account at any point in time based on any variable in the file and be able to compare it to other similar loans.

"The WebSphere product at this point has taken all of our small homegrown applications that we've developed over the years, that were kind of scattered in different programs, and has tied them all together into one manageable program so our programmers can now write everything in Java and they can move it from application to application and use is just about anywhere." GH&I is in the process of designing new systems with WebSphere products that are going to allow the company to integrate its different applications even more closely.

GH&I is investigating the possibility of adding a new WebSphere product to its arsenal - HATS (Host Access Transformation Server). "One of the big reasons we're looking at it is that in our collections system right now everybody works on the old Wyse terminals," Jones says. "We call them dummy screens. They're green screens, and we find that when we recruit new employees, they're not accustomed to it. Everybody has grown up in the Windows environment and we need to be able to move them into that environment. So they're going to go from the green screen to the GUI." Jones estimates that integrating HATS into GH&I's collection systems will allow the company to shorten the training process for a new employee by as much as 25-30%. "This obviously translates into a dollars-and-cents savings," he says.

GH&I plans to greatly expand its business over the next few years. "The industry is growing, but I think we are outpacing the industry," Jones says. "Our niche in the marketplace - and our brand name - is really established at this point. We are looking to increase our business by approximately tenfold over the next four years."

"We are presently streamlining our business for organizational efficiency and addressing the present capital structure to enable Global to attract new investors. The raising of new funds is going to allow us to increase the size of our portfolio substantially," Jones says. "Our challenge here is being able to manage that growth with the right type of technology. We're looking at WebSphere for products and innovation that are going to allow us to take the uniqueness that we've established here and build it out and expand out on it, to extrapolate it into a larger portfolio."

"Without WebSphere's help over the past several years we probably would not be in the position we are in today - prepared for the growth that we're about to experience," Jones states. "Gathering new business is easy; managing the business when it comes through the door is a whole different ball game. And WebSphere has helped us manage the business once it comes through the door. After that it's a matter of maintaining it, and that's where the future growth comes from."

More Stories By Pat Martin

Patti Martin is cofounder of Simplex Knowledge Company, where she is Vice President of Creative Services. She manages the company's Web servers and oversees Web content and creation. Patti received her education at the New School in New York City and has taken continuing education classes at NYU and the School of Visual Arts.

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