Suggested Tech Goal: Become Members' Electronic Filing Cabinet
What should be every credit union's technology goal? To become members' "electronic filing cabinet," according to one expert.
That was the message from Steve Williams, a principal at Scottsdale, Ariz.-based consultancy Cornerstone Advisors. Williams, who delivered a keynote address at the recent CUES Directors Conference here, said he is "shocked" at how technologically advanced many small CUs are.
"Technology is the hardest thing a credit union does, because of its complexity," he said. "However, many credit unions are ahead of banks when it comes to their technology platform."
Among the many CU technology accomplishments Williams listed were call centers and voice response units, automated loan underwriting, and asset and liability management software. He said check imaging and online banking has led to "financial voyeurism" and, potentially, better member retention.
'People Don't Want To Leave'
"People want to look at their transactions. Credit unions are becoming an electronic filing cabinet for members," he said. "This makes people not ever want to leave." -mail and file attachment transfers have become so commonplace, they are thought of as "low-tech," but Williams said the ability to attach documents has changed workflow and reduced turnaround time and sharing of information. Similarly, intranets streamline many processes by reducing paper flow and providing information in real time.
Other highlights include debit card usage, which he said has become a significant source of fee income for CUs-$40 to $50 per year per active card, and growing.
"The biggest win in the credit union movement is online loan applications with instant decision making," he said. "It has increased member convenience while reducing the overall cost of originating a loan."
Top 10 Things To Do
Williams offered a "Dave Letterman Top 10 List" of technology-related things CUs still need to master.
* First on the list was bolstering sales and referral tracking capabilities for all products and services, which he said CUs are "pretty lousy at." Williams said credit unions need a central database that will track who sold what and who referred whom.
* Second, CUs should deploy enterprise-wide contact management for both business development and service efforts, he recommended. "This keeps members from having to double-enter their information. There is nothing worse than being transferred to three different people and having to explain who you are and why you're calling three times. Also, it lets a credit union track members more efficiently-it knows when a member was sent information he or she requested, and it knows which members aren't interested in certain information."
While some CUs have done good things with their intranets, Williams said many have only gotten as far as using it to hold the employee phone list and the manual of policies and procedures.
* His No. 3 suggestion is to upgrade the intranet to include automated workflow and document management software.
* Fourth, he recommended migrating more service activities to self-service Internet transactions.
"Take that traffic onto the Internet and get people to do more things for themselves," he said. "Now, all most people are doing is checking balances. Sometimes they look at their transaction history, and a few make transfers. Get them to pump their own gas."
* One possibility for members to do more for themselves is encapsulated in tip No. 5-build a web-based loan origination program that allows members to check online to see the status of their loans during the entire process. Williams said only 20% of CUs presently have this capability.
* Sixth, credit unions should take advantage of the growing power of online business-to-business ("B2B") networks to lower costs in the lending process on such items as appraisal and title.
* Williams said CUs do not have member information together in one place, so his seventh tip is to develop more comprehensive systems and operating process to maintain this information.
* Along the same lines, No. 8 is to better integrate systems by improving the capabilities of internal systems.
* Ninth, credit unions should implement the systems necessary to support small business products. Williams said technology vendors still are in the early stages of developing systems for business banking.
* Finally, tip No. 10 is to watch payment system trends such as Check 21, real-time money transfer, and innovations in credit cards and loyalty programs.
Williams told the audience of directors to return to their CUs and ask: "How are we doing?" on all 10 items.
18 Years And Waiting
Unfortunately, technology vendors and so-called experts have spent more than 10 years promising CUs all systems soon will be integrated-which has yet to occur. "Credit union executives get excited about the fictitious claims of channel integration vendors make," Williams said. "To succeed, a credit union must be able to manage its vendors. Credit unions must have a plan, or they will fail."
Case in point: 18 years ago, Williams was working at a bank. At the time he was told that in six months all customer information would be in one place. "And 18 years later, it's still not in one place," he quipped.
According to Williams, one of the most important things a CU can do is to have a technology steering committee and a long-term strategy. He said a bad steering committee simply rubber-stamps everything, or approves haphazard technology purchases.
"What often happens is, someone goes to a conference and gets all excited about a product. He goes back to his credit union and tells people, 'We have to get this.' Then it comes and they plug it in to their existing system and it doesn't work. That's because it wasn't part of a long-term plan."
"Technology is a paperweight, nothing more," Williams continued. "Unless a credit union has a good strategy and practices good project management, things go downhill. Keep in mind: 70% of all projects involving technology come in late and over budget."