Queststar Bank proves that a small asset size doesn't necessarily translate into technological timidity.
The $106 million-asset bank's extraordinary growth since its start in 1984 has been aided by a bold willingness to try new technologies in its dogged pursuit of improving efficiency and reducing operating costs.
What is even more notable about QuestStar's automation game plan is the fact that the Houston bank relies on a service bureau for its data processing. While taking advantage of many of the ready-made systems the service has to offer, QuestStar has also pushed its provider to help it meet some special needs.
Since signing a service bureau contract with Fiserv Inc. in 1990, the bank has put in local area networks at three of its four branches, installed a special system for its overdraft protection product, and introduced an automated telephone banking system that answers customer queries in three languages.
"We try to be on the leading edge of developing technology," said Don Wigley, QuestStar's chairman and chief executive officer. "Everyone at the bank has a workstation, except me!"
The bank's automation needs have risen because of the niche it carved for itself out of the tumultuous Texas banking market of the 1980s. During this period, large banks were acquiring the state's failed and failing institutions and aggressively weeding out the less profitable low-balance accounts. This created a new, untapped market for the fledgling QuestStar.
"We made [low-balance accounts] our specialty, and we are heavily involved in small-business accounts and [Small Business Administration] lending," Mr. Wigley.
This strategy has certainly been successful, considering that the bank has grown from $36.9 million in assets in 1987 to $106 million in 1992, when it also posted a 1.78% return on assets. Earnings for 1992 were $1.6 million, a 42% increase over the previous year. Assets for 1993 are expected to reach $128 million, aided in part by the opening of the bank's fourth branch, located in a grocery store.
In a continuing effort to improve customer service, last year the bank introduced its Quik-Balance telephone banking system. The system, installed delivers account information in three languages - English, Spanish, and Korean.
"One-third of Houston proper is Hispanic," Mr. Wigley said. "We also have about 15,000 documented Koreans" living in Houston.
Callers can use the system to get balance information on checking, savings, money market, loan, and certificate of deposit accounts; verify the clearance of specific checks; and order account statements by facsimile machine. The line is open 24 hours a day, seven days a week. On average, it handles 7,000 calls and 10,000 transactions a week, including 250 requests for faxed information, which cost $1 each. The most common request is for account balances.
"The system eliminates a tremendous number of calls we once handled with a person," said Mr. Wigley. "Handling these calls was a real chore, especially for low-balance accounts. These account holders are the kind of people who really keep track of their balances."
The success of the telephone line has enabled the bank to reduce its customer service staff by one full-time and one part-time employee. The system also takes some of the burden off branch tellers and new-accounts officers, who routinely steer customers with account balance queries to the in-branch Quik-balance telephone.
"Having the system available there is a lot better than standing in line to get the same information," Mr. Wigley said.
Apart from saving the bank some money, the phone line also addresses unique concerns of its Korean customers.
"Members of the Korean community don't like to discuss their finances publicly," said Robin Garnett, assistant vice president at QuestStar.
Quik-Balance is one example where QuestStar turned to its service bureau to help it find the right system for its needs. After settling on Cecorp, an Irvine, Calif.-based vendor of telephone system software, Fiserv worked to customize the system for QuestStar.
QuestStar turned to Fiserv again when it decided to automate its platform and needed a micro-to-mainframe linkup to make the system more useful.
"This mainframe interface has saved us from having to input the same information three or four times," said Tim O'Brien, executive vice president of operations and finance for QuestStar. "Previously, a new-accounts clerk handwrote the information first, then typed it to a signature card. Data processing would then take it and enter it to the mainframe, only to have it retyped again for a new-accounts report."
Now when a customer comes to a new-accounts or lending officer, information is entered into a personal computer while the customer is sitting there. At the close of business, this information is sent electronically from the PC to the mainframe with no rekeying necessary.
The PC-to-mainframe connection isn't the only electronic link at QuestStar. The bank has also made great use of local area networks that link each branch's computers and terminals.
With the LANs, information moves quickly, Mr. O'Brien said. That gives the main office more control and scrutiny over each day's loan originations. "We can track each branch's performance every day," he said.
Platform officers and tellers have access to an extensive customer information file, a central electronic storage site that records each relationship a customer has with the bank.
The file, which can be accessed by name, Social Security number, or account number, provides important cross-selling opportunities and support for customer relationship banking.
Another significant development in the bank's technological makeup is an insufficient-funds module added in 1991, which is a source of fee income for the bank.
"One of the priorities when we converted to Fiserv was having the ability to offer a product called Cover Your Check," Mr. O'Brien said.
That's QuestStar's overdraft protection service, which links accounts and transfers money automatically when a checking account is short. Customers are charged $2 each time the service is used.
"The fact that we offer low-minimum, low-service charge accounts tends to attract people who are more likely to overdraw their accounts," Ms. Garnett said.
Currently in the third year of a five-year contract, the bank is reassessing its service provider agreement and considering a move to an in-house system.
"Our main consideration is the cost," Mr. O'Brien said. "Although the cost of going in-house has come down considerably, there are a lot of pluses and minuses. We would have control of our own destiny, but we would also bear all the expense. There's also the limitations of our own knowledge."
Whatever the final decision, it's likely that QuestStar will make it without the fear of trying something new.