Canada's Coast Capital Savings Turns To Technology To Trim Its Operating Costs

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Credit unions cost too much to run.

That unsettling perspective is keeping Joel Rosenberg on his toes. The CIO at Coast Capital Savings CU thinks technology can help give credit unions a fighting chance against their money-spinning competitors-banks.

"Credit unions are high-cost producers," explained Rosenberg. "We have to evolve and get better. We can't just sit in the back and wait for stuff to happen."

Recent benchmarks showed Coast Capital Savings CU that its operating costs are nine cents more to the dollar than its bank neighbors'. At the same time, Rosenberg continued, CU members "are coming to expect a certain type of service, with the same products and competitive rates found at the bank across the street."

The CU's 300,000 members want it all - branch, call center, and Internet delivery. "It's up to us to integrate those channels," Rosenberg added.

The $4.5 billion CU (all figures in this story are in U.S. dollars) is responding to high costs and demanding members-with a steady stream of mergers and an allegiance to its raison d'etre.

"We are merging with like-minded organizations," Rosenberg said. "The mergers connect well with our roots of pooling resources and cooperating, while at the same time keeping our local flavor."

Coast Capital Savings is in the midst of its second merger in three years, with a third in the works. The second largest CU in Canada had to choose a core system that could tie the adopted family together amidst rapid transaction growth, and provide service via multiple delivery channels, said Rosenberg.

"We chose Sanchez Profile to aggregate all entities under one platform," he said. Profile, provided by Malvern, Penn.-based Sanchez Computer Associates, Inc., is an online core processing system for deposits and loans for the financial services industry.

The 42-branch credit union was able to handle a 90% processing increase during the first merger and an additional 33% during the second merger very month, Coast Capital Savings funnels more than one-million in-branch transactions and four-million self-service transactions.

"Profile really provides us an advantage with the ability to integrate third-party applications," Rosenberg continued. For example, its Internet banking platform is tied to Profile.

The CU has partnered with Sanchez since 1993, but keeps its options open as it grows. "We're always on the watch," Rosenberg said.

Coast Capital Savings CU's system conversions help drive an overarching tech strategy, said Rosenberg, who was named one of Computerworld's Premier 100 IT Leaders for 2003.

"Our new business model is revolutionary in terms of how financial institutions do business," Rosenberg explained. "We're not using outsourced technology from the perspective of trying to lower costs, but from the perspective of driving efficiencies throughout the whole organization."

The focus may seem familiar: Eliminate the number of times an employee handles data, particularly when the human touch isn't enhancing member service.

But Coast Capital Savings has made sure steps towards the front- to back-end automation ideal, or "true, multi-channel, automated processes," said Rosenberg.

A member can choose a term deposit online, for example, and with a single click, confirm the transaction. "There's no manual human intervention at all; the process is completely automated from front to back," Rosenberg said.

Meanwhile, the CU maintains a healthy cost of operation. A monthly peer-group financial analysis by the national trade association, Credit Union Central of Canada, shows Coast Capital Savings is 35% to 50% less expensive to run.

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