Small CUs Take Up Offer of Free Online Platform

A free online banking platform is raising the stakes at a $3.1-million credit union here.

"People are finding out that we're improving services without charging fees," said Faith Mitchell, CEO with Ketema FCU. "And our existing members really wanted online banking. Word really got out and usage has grown tremendously."

The number of new checking account openings has nearly doubled since the CU launched homebanking in February, Mitchell said.

Meanwhile, the KFCU is paying nothing to offer the service. As part of a 'Free for 2003' promotion, Orlando, Fla.- based Worldwide Interactive Services, Inc. this year is providing Internet banking with no sign-up or activity fees to CUs with fewer than 2,000 members.

Members picked up on Ketema FCU's website banking presence right away-20% of the CU's 550 members have already logged on, Mitchell said. Hits have increased to 400 per month, from 20 per month in February.

For a credit union that serves aerospace manufacturing employees with little access to computers at home, the adoption rate is all the more impressive.

"Homebanking is a really easy, vital tool for the members to use and access information," Mitchell added.

Internet banking has extended the CU's operating hours, as well.

"Members work on three shifts at the plant, and a lot of them can't get to the branch when we're open," Mitchell explained. "But members can use homebanking anytime, day or night."

About 30 CUs have taken advantage of the "Free for 2003" promotion, said Chris Pantaleon, vice president of sales and marketing at Worldwide. He's surprised more CUs haven't responded.

"A lot of CUs think it's too good to be true," he said. What's more, "implementation only takes an hour and a half, and we do the website for free."

It wasn't just the free price that convinced KFCU to offer banking online. "We would have gone with homebanking anyway, but the initial cost of set-up made it so that we would have had to wait another year," Mitchell said.

Of course, the "free" part will soon end for the CU. Come New Year, Ketema FCU will start paying $99 per month to offer homebanking to members.

Mitchell isn't worried. "The fees are not cost prohibitive. It's an easy budget item and well worth the investment."

In fact, Mitchell is counting on homebanking to shoot the CU to the $4-million in assets mark. "We've got more members who are finding out that we have the website. We've got promotions plastered all over the plant, in our newsletter, and spread by word of mouth."

Even though Worldwide's service is free, it has bells and whistles, Mitchell said. "Members can send us an e-mail at the site, and we can respond right through the website. We can check transaction volume and pull up comparative graphs."

In addition, Ketema can e-mail promotions to its membership thanks to the homebanking email list. "Right now we're advertising a sale for loans," Mitchell said.

The main challenge for Ketema FCU is in training members to set up log-in PINs, she said. "Members have to go to our audio teller to set their PINs. Setting up the PIN on audio teller gets confusing. Some members will call four or five times and still don't get it. So we try to set it up for them while they're in the office."

Worldwide launched Ketema FCU's homebanking service in one week, she said. After a one-week test with the CU's board members and three employees, homebanking was "up and on my website." The CU also uses Worldwides' audio teller services.

Worldwide's Internet banking includes full transactional capability, an e-message center, account alerts, and account detail and summary information.

Credit unions with fewer than 2,000 members pay $199 per month for unlimited service, whereas CUs with fewer than 1,000 members pay $99 per month.