CU Journal Roundtable: IT Execs Look Forward

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WEST PALM BEACH, Fla. — The complete virtual branch is no longer "nice-to-have" in 2011; it's a must.

That's according to the eight members of the CUNA Technology Council's Executive Committee, who participated in a "Looking Forward" Roundtable hosted by Credit Union Journal. In short, said participants, credit unions should allow members to do from self-service channels everything they can do in a branch.

The Digital Enterprise

The "Digital Enterprise" — as Seattle's BECU calls it — will help grow younger members as well as contain costs through automation, according to the Committee.

"Credit unions are suffering from compressed margins, so we need to learn to scale," explained Butch Leonardson, Committee member and BECU SVP and CIO. "We've put a lot of functionality into our channels, most of which generates no revenue. So we need to grow top-line revenue at a much faster rate than our growth rate in operating spend. Each year our spend-per-asset dollar needs to decrease and our members per FTE needs to increase."

Good data will help credit unions accomplish the ultimate feat: engaging the member, suggested the Committee. "We make it easy for the business to tell the member in real-time what products or services they need in order to become engaged," said Leonardson.

How does a credit union know if a member is engaged? Extract each member's relationship information from disparate systems into a CRM or business intelligence engine, said Tom Gessel, Committee member and SVP and technology officer at Tempe, Ariz.-based TruWest CU. Analyze the profitability of each product in order to create a profitability model. Then, measure the individual relationships against that profitability model.

Finally, give members incentives to increase the profitability of the relationship, said John Best, Committee member and SVP and CTO at Wescom CU in Pasadena, Calif. "We tell all members their engagement scores and then incent or pull back service based on their level of engagement. Some members who leave are those refusing to get engaged and dragging down the entire cooperative."

Make it easy for members to get engaged with the CU, said Belinda Caillouet, Committee member and VP-IT at Spokane Teachers CU in Liberty Lake, Wash. "We're automating processes to remove any barriers that would hold a member back from getting a product, such as a credit card."

Bring Sexy Back

Credit unions need to "bring sexy back" in order to attract younger members, said Best, and social media and text-message banking can help, the Committee agreed.

"Websites offering information will evolve into interactive sites, perhaps converting completely to a social media site such as Facebook," said Robert Reh, vice chair of the Committee and CIO at Westbury, N.Y.-based Nassau Financial FCU. Online conversations that are part of the social media sphere will help build "trusting, two-way relationships" with members.

"Text messaging will be critical," primarily because teenagers won't use anything else for communications, continued Jennifer Weiss, Committee member and VP-IT, Sandia Laboratory FCU, Albuquerque, N.M. With that comes a hoard of security issues, including text-message phishing, or "smishing," she said.

Credit unions should implement authentication methods that rely on verifying cell phone numbers or e-mail addresses, not on security questions, and they should have the ability to "take down" smishing phone numbers and sites, said Best.

Increase Self-Service Options

Increasing self-service options to attract younger members goes hand-in-hand with back-end process improvement, said Rudy Pereira, Committee chairman and SVP-operations and technology at Chicago-based Alliant CU. "We're using very much the same self-service tools developed for the member to improve our own internal processes."

Individual CUs won't survive on their own, said Chad Graves, Committee member and VP-IT at Ent FCU in Colorado Springs, Colo. "Even in the billion-dollar range, I wonder about sustainability. We need to partner with other credit unions or entities that allow us to have the efficiencies of a multi-billion dollar organization."

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