Use Of E-Statements Cuts Operating Expenses By $250,000

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Credit Union: Fort Knox Federal Credit Union, Kentucky

Nominated By: USERS, Inc., Valley Forge, PA

Nominated For: Internet banking and e-statements

Fort Knox Federal Credit Union cut its annual operating expenses by nearly a quarter-of-a-million dollars when it added e-statements to its member services.

With the help of USERS, Inc, Valley Forge, Penn., the $440-million Fort Knox FCU was able to get 22,000 members to choose electronic statements over paper ones.

"When we upgraded our Internet banking solution several years ago, we combined the e-statement solution," said Bill Rissel, President/CEO, Fort Knox FCU.

At that time, members were then given several options. Those who utilized the credit union's home banking services could receive monthly e-statements at no charge or pay $1 per hard copy, Rissel said. Those members who didn't have Internet access or chose not to do their banking online would still receive hard copies at no cost to them.

"We were prepared for a fairly negative response at first, but that never really came," he said.

Instead, the members went through a series of online agreements to trade their paper for electronic versions of their monthly statements. Rissel said 3,000 members still receive paper statements.

Yet, as Rissel also noted, "Of the 22,000 that have e-statements, only 3,000 ever go in to check theirs. That tells us that 19,000 members per month don't even look at their statements (online)."

Chances are that many of those same members weren't any more interested when they received their statements via paper.

At 85 cents per statement to 22,000 members per month at the annual cost of $224,400 per year, that was a lot of wasted dough that is now being spent on products and services that members do use, he said.

Rissel said USERS, Inc. also gives Fort Knox members options that allow them to receive an e-mail notification that their statements are ready, let them know if their account balances are getting low, and inform them when checks bounce.

Rissel said the the credit union embraced the same Internet technology to send out NSF notices.

"By the time a credit union processes a statement, prints it, stuffs it and gets it in the mail, 95% of our members already know their check bounced," he said. Through USERS notification system, he said, the information is available much quicker and doesn't waste time or money.

"Members have changed the way that they do business with credit unions but we have not changed the way we do business with them," Rissel said.

By taking advantage of all the technology available, he said, credit unions not only offer members more convenience, they can save on operating expenses.

Fort Knox has a net worth of 14% and an ROA of 1.6%. It also boasts net operating expenses at 1.7% nearly a full percentage point, or $4.2 million, below its industry peers, Rissel said.

"It's programs like these that allow us to get to that kind of efficiency," he said.

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