ARLINGTON, Va. — Faced with system inefficiencies with its maintenance, administration, vendor management and contract management segments, the Partnership Federal Credit Union developed a business technology unit that has saved hundreds of thousands of dollars.
"This best practice was introduced to enable specialized business units to focus on their primary duties rather than the peripheral responsibilities of vendor and system management and analytics," said Partnership FCU's Director of Lending Strategies and Business Technology David Martinez.
The idea for the unit was conceived by the credit union's COO Bonnie Ortiz.
The goal was to allow the $150 million institution's frontline business units to focus on their primary responsibility of serving members, fosters integration and collaboration across business units, centralize and deepen vendor and project management expertise.
This would, in turn, increase efficiency and decrease costs through system and vendor optimization.
"Prior to implementing, system maintenance and administration, vendor management and contract management were spread throughout the organization. Each business unit leader owned multiple vendors," said Martinez. "This decentralized ownership among business unit leaders prevented the organization from reaching the depth of these programs that was so strongly desired."
To establish a baseline assessment to develop the unit, the team reviewed contracts, vendor relationships and operating systems across all business units.
Interviews were conducted to obtain insights and frontline perspectives from each business unit.
"The establishment of intersection meetings was essential as we explored how each business unit's activities and needs intersected with, enhanced or occasionally impeded other business units," said Martinez.
"Once needs assessments and efficiency studies had been completed, we then developed a plan to capitalize on the opportunities we had uncovered, including enhanced efficiency, vendor consolidation, expanded automation and contract," he added.
Though Martinez said there were both tangible and intangible benefits, bottom line benefits were realized for the CU and its 12,200 members.
Vendor due diligence and contract renegotiation resulted in annual cost reduction of more than 25%.
In one case, renegotiating its card processor contract saved the CU more than $200,000 over the term of the contract.
"This alone is projected to save us hundreds of thousands of dollars over the term of our largest vendor contracts," said Martinez. "And by automating reports, mailings and title and lien tracking, the CU's title clerk now saves an estimated 20 hours per week worth of work.
Before the unit was created, inactive bill pay accounts remained open indefinitely.
As a result, nearly 30% of bill pay accounts did not pay at least one bill every 90-days, he noted. A program was established in which inactive members are notified that if a payment is not made at least once per every 90 days, the account will be deactivated.
"This program reduced our bill pay expenses by nearly a third," said Martinez. "Additionally, the percentage of bill pay users who pay at least one bill a month has increased from an average of approximately 45% to the new average of nearly 65%."
