CUs Plan To Boost Budgets In '04 For IT

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Technology executives at two diverse credit unions aren't pinching pennies this year, much in line with what industry analysts have predicted for IT spending.

Chief information officers have slightly bigger wallets in 2004, according to pundits such as Stamford, Conn.-based Gartner, Inc. and Framingham, Mass.-based CIO.

In Seattle, Watermark Credit Union will continue to spend on technologies that heighten member service.

"Even though we try to watch our expenses as much as we can and there may be fewer big items in the budget this year, our technology spending is driven by what we're trying to accomplish as an organization," said Brent Evans, Watermark's vice president of Information Technology (IT). "We spend what we need to spend, and our technology budget is not far off from previous years."

However, the $393-million CU "isn't much" for bleeding-edge technologies, Evans noted. "If 20% of your membership isn't knocking down the door for a service, or you're spending hundreds of thousands of dollars on bleeding-edge for 1% of your membership, why do it? If your goal is to have first-rate member service, then you should let other organizations flush out the bleeding edge stuff."

In Harrisburg, Penn., Pennsylvania State Employees CU (PSECU) is one of those other organizations flushing out new technologies. In fact, the $2.4-billion CU stakes its reputation on innovative electronic services, such as the award-winning UPost@Home. Two years after UPost was offered, about 3% of PSECU's members, or 10% of homebanking members, use the service, according to Rick Long, PSECU's vice president of Information Technology. UPost allows immediate access online to pre-posted deposits that are still in the mail. Despite their different tacks, both credit unions will be spending money on a number of similar projects. For instance, Watermark and PSECU will look to implement business continuity plans (BCP) this year.

Implementation at 65,000-member Watermark CU will demand "modest IT investment," according to Evans. Watermark hopes to rewrite and execute BCP by third quarter, he said.

PSECU's business continuity plan will eat up a good deal of the IT budget, said Long.

"We're really going to be focused on BCP this year, with the purpose of making everything redundant, including our communications lines," he said.

The three-year project "is going to take a lot of money," he added.

Technology spending for BCP at the 296,000-member Pennsylvania credit union includes a core processing system upgrade for about $400,000, a data center infrastructure upgrade for about $1.6 million, building or purchasing an operations center for about $2.5 million, and developing a redundant data center for about $3.5 million, Long said.

Another IT project for both credit unions- and certainly across the service industry-is the knowledge database.

By building a database of information frequently given to members, Watermark hopes to increase the consistency of information and build better member relationship management, said Evans.

The knowledge database will bring a "cultural change" beginning this quarter, he said.

At PSECU, knowledge database management should also ease e-mail volume by about 25%, Long added.

In addition, both Watermark and PSECU will set money aside for new telephony and online integration of funds transfer, account aggregation and bill pay services.

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