While most banks rely on a slew of computer systems to deliver various retail banking functions, San Francisco-based Union Bank has chosen a singular setup based on the most ubiquitous of modern conveniences: the telephone.
"Our retail banking system is one-stop shopping," said Charles L. Pedersen, executive vice president and manager of the bank's Los Angeles-based operations and automation group.
The nucleus of the $16.5 billion-asset institution's retail banking program, Teleservices, is a software package called Personal Transaction Teller that handles bill payment and funds transfer.
With Teleservices, customers can manage their banking from a touch-tone phone, 24 hours a day, seven days a week.
Developed by Stockholder Systems Inc., Norcross, Ga., Personal Transaction Teller acts in concert with the bank's telephone voice-response hardware to control the complete processing of bill payment and fund transfer requests.
Ultimately, it directs the flow of instructions and information that makes Union Bank's comprehensive telebanking system possible.
"The software allows us to offer a full-service banking system in the best and most affordable way we can," Mr. Pedersen said.
Union Bank achieves significant economies of scale with PTT. For instance, it takes just two employees three hours in the morning to verify the more than 20,000 bill payment transactions the bank processes each day.
"You can save a huge chunk of cash because of the reduced need for new hardware and the time involved in researching, developing, and testing new approaches," said Frederick A. White, a principal at First Annapolis Consulting, Annapolis, Md. "Systems like this don't require terminals or an expensive specialized [hardware] to run on."
The premise of the PTT software is relatively simple. Union Bank customers contact the bank by dialing up on their personal computer or a touchtone phone, or calling an operator manning a terminal connected to PTT. The customer's payment or transfer instructions are entered into the system by the PC's modem or an audio-response unit, or by an operator at a PTT payment screen.
The system then performs the necessary processing to complete the transactions. PTT performs all the on-line, realtime edits to verify the security and accuracy of all bill payment and funds transfer requests.
In the end, PTT provides confirmation information to be passed back to the customer via the data link, voice response unit, or operator.
The software has been the backbone of Union Bank's Teleservices program, which has been in place since 1987. Teleservices provides customers with complete account status information. It also allows them to transfer funds between accounts and perform other functions, such as stopping payment on a check and obtaining photocopies of statements and canceled checks. With its bill paying option, customers can pay bills without writing checks.
"PTT is the pipeline for the whole Teleservices offering," Mr. Pedersen said.
All Teleservices functions are accessed with one account card issued to customers. As a customer decides to use more of the retail features offered by the bank, those capabilities are added to the card.
That fits with the bank's strategy of having a common thread run through all of its retail banking operations to make things easier for its customers and reap greater efficiency and cost savings for itself.
"We provide a common look and feel to all of our banking services," Mr. Pedersen said.
The idea is to give customers a sense of familiarity and comfort when they do their banking from outside the branch.
The system is also a revenue generator. By allowing customers to manage all of their accounts without having to enter the branch, the bank has become more efficient. It currently averages 400,000 customer initiated transactions a month.
Union Bank remains something of a gem in the depressed California economy. In 1992, it posted net income of $103 million after a $93 million gain the previous year.
The fourth-largest commercial bank in California, Union Bank has found PTT to be a crucial part of its campaign to reel in corporate customers.
The software was originally developed as a home banking or telephone bill payment system, and this is how it is most widely used. However, some business clients have discovered that the system can act as an effective electronic funds transfer system to meet their business needs for everything from electronic deposit of payroll to corporate-to-corporate bill payments.
Thus, smaller companies are using PTT to pay employees or pay bills to other corporations with just a touch-tone telephone, avoiding the need to install their own computer systems for direct deposit. Union Bank can handle everything, including data entry, for these businesses.
"The system and what it allows us to offer has made us look good to potential customers," Mr. Pedersen said.
Union Bank has used various versions of PTT to control its retail banking programs for almost 13 years, and has no plans to scrap it.
"Like the old commercial says, if something works you stick with it," Mr. Pedersen said. "We've had one system as the backbone of our capabilities since 1980."
In some ways, say industry observers, use of the system has placed Union Bank - and the more than 30 other financial institutions using it - ahead of the curve.
"Bill payment services have only just recently gained widespread popularity," said Mr. White of First Annapolis.
"Banks like Union that have been offering these services for a while are ahead of the game and are better positioned than banks that now have to purchase systems or come up with their own bill payment systems," he said.
Mr. White said a number of institutions, including Chemical Bank, experimented with bill payment and funds transfer technology during the last decade, but had limited success at best. Most ended up scrapping the systems.
One reason why banks gave up was that some home-banking efforts were buried under the avalanche of mergers, he said. Union Bank on the other hand, kept its PTT software after its merger with California State Bank in 1988.
"Banks were forced to chose between systems," Mr. White said. "And being as image-conscious as they are, banks thought the hottest and newest pieces of technology were better than older ones. That's not always the case."
Sticking with PTT also gave the bank time to work out the system's kinks.
"Through trial and error, we've kept up with the newest wave of retail banking systems with older technology," Mr. Pedersen said, proving that in this case, less can sometimes be more.
