"We have to cut costs." That statement has become the mantra of the past two years, leaving many already-lean credit unions faced with some tough decisions. Reducing personnel or closing branches early might chop expenses, but these tactics could also erode service. Salary freezes might cause top employees to look elsewhere. Delaying new product offerings could put the institution at a competitive disadvantage in the market.
That's why many credit unions are turning to operational efficiencies to reduce costs, while actually increasing both service levels and their competitive edge. To accomplish this, they're first making an investment — in an open, flexible core system.
Spending money to increase capabilities is one thing — but, spending money to save money? With the right core system, well-utilized throughout the organization, that's exactly the outcome. From there, the efficiencies increase, along with the opportunities.
To achieve the fastest results, it is critical that credit unions choose a core that is built on an open architecture because it enables other systems to easily integrate with the core — without spending time and money rewriting code. Not only does this enable credit unions to make the most of their existing technology investment, but it "future-proofs" the institution, ensuring any new services or systems it brings on board down the road will integrate as well.
This institution-wide integration is also an efficiency driver, saving time, reducing errors and slimming down operating costs. Think about it this way: almost every non-integrated, stand-alone system involves redundancy — a repetition of the same tasks. For example, something keyed into a stand-alone teller or loan system must be manually rekeyed into the core.
An integrated solution eliminates this wasted effort and uses intelligent workflow to streamline processes. Instead of people moving documents from place-to-place, the system automatically routes the document from touch point to touch point through a series of specific, ordered tasks until the transaction is complete.
By automating processes and workflows, credit unions can improve efficiency by as much as 75%, which has significant, positive financial impact. For example, one credit union reported savings of $42,000 a year, just from automatically importing indirect loans into the core system. Another automated the processing of more than 100 programs every day, saving hundreds of thousands of dollars in staff costs, as well as reducing the error rate inherent with manual entry.
Self Service Saves Money & Engages Members
An integrated core system also enables credit unions to ramp up their self-service options, including Internet banking, mobile banking and interactive voice response systems.
Not only does a robust self-serve offering increase retention and attract new members, it significantly decreases costs. Fewer people through the branch or on the phone means the credit union can grow without adding personnel. A robust online offering also has a green halo around it. The more people who choose to view their statements electronically, the fewer paper statements there are to print and mail.
Members don't just want to view statements or check balances online. They want to apply for loans, open accounts and get the instant gratification of an approval or account number before they log off. A core system that supports third-party integration makes this a reality.
Deploying an Integrated CRM Strategy
Among the few simple truths in the financial industry: it's less expensive to keep a member than to recruit a new one. Industry statistics show that banks and credit unions spend between $200 and $1,500 to acquire new households — only to see them vanish before their one-year anniversary.
By integrating the customer relationship management (CRM) solution with the core, institutions can have a single repository with detailed information on every piece of that relationship, for every member. That enables management to view the profit contribution — or profit drain — at the product level for each individual account.
Just as important, it enables this key member data to be pushed out to all areas of the institution, so specific marketing messages can be relayed at all touch points, from specific banner offers on the Internet banking site to the ATM. Tellers can now talk to the member in front of him about an offer that's appropriate to that individual member, record the interest level and create the referral — or sale. Relationships are solidified, attrition rates go down and marketing dollars are spent where they deliver the greatest return.
It's a challenging time for the financial industry, but it's also a time of opportunity - for efficiencies, for new strategies and for greater member insight. If your institution is looking for ways to cut costs and achieve a rapid ROI, take a long, hard look at the heart of your operation. Investing in a new core system could be the healthiest way to reduce expense, improve service and breathe new life into your bottom line.
David McConney is EVP/General Manager, Credit Union Core Systems with Harland Financial Solutions. He can be reached at
