Learning From ESP
A few years ago Electronic Statement Presentment (ESP) was seen as the "must-have" feature of the future for commercial businesses and financial institutions. Many organizations scrambled to develop their own software solutions, frequently with price tags in the millions of dollars.
In spite of the expense, this initiative seemed like a worthy investment to stay competitive and to appear progressive in the marketplace. Unfortunately, the adoption rate (the migration by consumers from paper transactions to cyberspace) has not reached the percentage that industry analysts predicted, and the return on the investment has never materialized to predicted levels.
Now there are ways to provide eStatements more cost-effectively. Better still, there are keys to make any investment in e-statements pay off even before the adoption rate by members reaches expectations. One of the keys to accomplishing this goal is to make sure there is a seamless integration of the e-statement with paper statement processing facilitated by a third party outsourcing provider. In addition, credit unions will also generate a healthy ROI faster by using effective one-to-one marketing to encourage members to "turn off" the paper statements.
Satisfying Internet Savvy Members
Internet savvy members need and demand the ability to view their financial information 24 hours a day, seven days a week-anytime-anywhere they have Internet access. This convenience enables members to manage their accounts electronically as opposed to waiting for information to come through the mail.
Because the new generation of members prefers to perform many transactions online instead of walking into their financial institution, credit unions are losing the person-to-person contact with their members. Yet, because e-statements are an exact replica of the paper statement normally received through the mail, they create a consistent link between the credit unions and their members. The exactness triggers members to make a monthly connection with the credit union, (albeit via the Internet).
When a consumer makes a choice about whether to go with a bank, savings and loan or credit union, the individual looks at all the services offered. A credit union may find itself out of the running if it does not have ESP capability.
Alleviating Certain Risks
When it comes to technological advancement, credit unions can avoid putting their organizations in financial jeopardy by evaluating the costs and risks involved. The expense of telecommunication lines and the sophistication necessary to house the information and allow access to tens of thousands of people at the same time are prohibitive to most credit unions. Also consider the security, development and management necessary.
The solution lies outside. An outsource provider has solved those problems and is already using the best system. Using a single provider also protects the credit union's valuable data by eliminating the need to disseminate the information to multiple vendors.
The choice of outsource provider should be determined by basic criteria that include answers to these important questions:
* Does the provider specialize in credit union statements?
* Does the provider already have a suitable solution, as opposed to requiring custom development?
* How seamlessly (ideally automatically) can the provider manage the transition from paper to online?
* How much history does it archive?
* Does the provider offer single sign on? (This eliminates the need for members to log-on with an additional name and password when accessing home banking functions.)
* Does the provider offer paper processing services? (That is, do their services include all formats that would normally be sent in paper form?)
* Does the provider offer marketing support to speed the adoption of e-statements?
Another consideration is how well an eStatement provider can help with marketing eStatements. Promoting the "coming soon" and "now available" e-statements to all members is essential and can be accomplished through an integrated campaign via statement inserts, marketing notices, printed directly on the statement and targeted one-to-one marketing banner ads, direct mail or email.
Max Janasik, program manager of Corillian, an online banking provider, advises credit unions, "Consider the outsourcing option to be sure you are comparing vendors on an apples-to-apples basis and avoid vendors that have confusing pricing structures." Janasik makes a strong point. There is no such thing as "one-size-fits-all," in spite of the solutions promised by many web technology companies. Such off-the-rack products often include irrelevant features or lack elements helpful to banking, let alone nuances unique to credit unions. Credit unions should not endure paying for unnecessary functionality, nor the development of functions they need to customize. Says Janasik, "I think the most important advice I can give is to talk to other credit unions about their experiences with their vendors."
Out With the Paper
E-statements typically cost approximately 32 cents, one third of the cost of printing and mailing paper statements. Therefore, the fastest return on investment from e-statements comes when members elect to stop receiving paper statements in the mail and view them exclusively online. Using a single supplier that provides both paper and online statements enables a seamless transition for the members and a consistent link between paper and online statements. Such a provider can automate the process of turning off paper with a single click on the e-statement by the member.
E-statement Advantages to Credit Unions
Although the adoption rate of electronic statement presentment is not at the level at which it ordinarily becomes a good return on investment, the advantages it presents allow the institution to achieve certain benefits right away.
A component of the ESP is the Member Service Module (MSM). When members call the credit union for information, they may reference a document they have received. With MSMB the member service representative can see a replica of that document and help the member with his-her specific question.
Also, member services can integrate its Customer Relationship Management (CRM) through this link. Using their Marketing Customer Information File, or MCIF, they create marketing services targeted to cross-sell other products specific to that member more easily and cost efficiently than is possible with mass mailed paper statements. For example, the member might be sent an e-mail that says, "Your July statement is ready, and you have been pre-approved for an auto loan."
Faster, Better ROI
Outsourcing is the key to faster, better ROI on ESP. The first and most obvious advantage is bypassing huge development and system maintenance costs. The second way to accelerate ROI is to make it easier to "turn-off" paper statements. An integrated marketing campaign aimed at the adoption of e-statements is essential to accomplish the transition from paper. Third is the archival value. With statements archived online, there can be tremendous dollar savings to the credit union in terms of the personnel needed to file, research, print, prepare and mail paper statements and checks requested by members for tax filing, bankruptcies, audits and other purposes.
By focusing on a single source provider to manage a full spectrum of member communications, it is possible to get an early return on an investment in Internet home banking and eStatement presentment. Services include paper and electronic statements and notices, direct marketing, CD ROM archive and tax reporting.
Outsourcing to an established organization specializing in this function that is prepared to address all the criteria and demands of the function is among the options your credit union could consider.
About the Author:
Howard Lee is president and chief executive officer of InfoIMAGE, Inc., an outsourcing provider meeting the statement production needs of credit unions with production of electronic data into Internet, paper, and CD-ROM documents. For info: (650) 635-0488, ext. 264 or www.infoimageinc.com