WISCONSIN RAPIDS, Wis. -
The "magic service" was the privilege pay program-often referred to as courtesy pay or overdraft protection-offered through Harland Financial Solutions' UltraData Enterprise core system.
"Although we are happy with the income we're generating, the real plus is how many extra costs we're now able to save our members," offered David Stark, CEO of Bull's Eye. "From December 2006 to May of 2007 we generated $355,000 in fees. But, I can tell you; we were able to save our members well over $500,000 in merchant overdraft fees. Privilege Pay lets us give them a low-cost alternative."
To understand why the service was a godsend for BECU membership requires a brief history lesson. Bull's Eye Credit Union was founded 75 years ago to support the mill workers of central Wisconsin (indeed, Bull's Eye refers to a log rafter's landmark that indicates the deepest part of the river, allowing a logger to steer logs to the final destination with minimal loss). In 2000, the local economy had fallen on hard times. "The community lost 3,000 jobs between the year 2000 and 2006," Stark explained. "At the time, we didn't have an overdraft option in place. Originally, we'd call our members to see if they had the funds to cover the overdrawn checks. But, as volume levels increased, we just didn't have the manpower anymore. We were returning checks, the merchants were charging high fees, and we were frustrated that we couldn't help our members more."
The $105-million credit union initially turned to an off-line third-party solution, but quickly realized that what it really needed was a process that would integrate with its core system.
"The third-party system required more man hours than we liked because we couldn't automate it," he related. "When members called to ask about their account, not everyone had access to the information, so the teller couldn't explain to the member what was going on."
Customizing the solution would have been a long, laborious and expensive process, so when Stark learned that his CU's core processor was working on a solution of its own, he decided it was worth waiting for Harland.
"By going to a system that integrates with our core system, first and foremost we were able to improve member service because it assured multiple users could have proper access to the system to be able to answer member questions right then and there," Stark commented. "Behind the scenes, we were able to reduce the labor hours dedicated to privilege pay."
Measuring what this service has meant to its members has both a tangible and intangible element to it. "Even though this has helped generate fee revenue for us, it's still drastically reducing the fees our members are paying. Before they could easily be paying $125 or more between the NSF fee to us, plus the fee from the merchant, etc. Now, they're looking at a straight $25 fee," Stark observed. "But it's also about protecting our members' credibility with the local merchants. We had a lot of people here who lost their jobs through no fault of their own, and when times got tough, they still had to be able feed and clothe their families. They couldn't afford to build a reputation for writing bad checks, and we didn't want our checks getting a reputation for bouncing all over town, either."
The results for the credit union are tangible-and measurable-too. The new system allowed Bull's Eye to save four hours a day in manual processes, reduce staffing by one and one-half full time position, and dramatically increase fee revenue. From May 2006 to May 2007, the fee income rose from $136,000 to $335,000-a 161% increase, with a third of this coming from debit card Privilege Pay income.
As for ROI, Harland had promised Bull's Eye the system would pay for itself in six months. Harland lied-it only took three. "When we went to the board, we pared down some of the projections that Harland had provided to us. We wanted to be really conservative about this," Stark related. "But not only did it do even better than we projected, it did better than Harland projected. It was even more successful than we thought it would be."
Moving to the automated system also helped Bull's Eye ensure that its privilege pay offering was compliant with regulatory requirements, added Brenda Van De Loop, operations manager of BECU. "It's improved our consistency, as well," she noted. "Because it's automated, it's black and white so everyone is treated the same."
The system also integrates with the credit union's collections work card, speeding up the collections process when some of these accounts end up in collections, she added. "It's very flexible because it has the ability to integrate with debit, ATM and ACH."
FOR MORE INFORMATION
www.becu.net
www.ultradatasystems.com
