: Palo Alto, Calif.Asset size
: $1.4 billionProject
: Core banking and telecom overhaul combined with process redesigns.Why we chose it
: The credit union took its IT infrastructure through massive change, paying close attention to best practices and efficiency.
The elite membership of Stanford Federal Credit Union, who work at Stanford University, its hospital and its linear accelerator, have high net worths, high credit scores, and a special fondness for technology - 90% of member interactions take place through computers and mobile devices. Although the credit union does have a smattering of branches, branch volumes are low. "Most of our membership does everything online, on mobile or with debit or credit cards," says CIO Jim Phillips. "They prefer to be that way; it's not us pushing them."
This customer base makes technology prowess and efficiency essential to the credit union. "They're very brainy and they'll let us know if they don't like something," Phillips told us earlier in 2012, when Stanford FCU had just completed a core banking and telecom technology overhaul and replaced online banking, mobile banking and voice response systems.
In the next phase of this project, it's working to improve process efficiency and integrate systems throughout its infrastructure.
As part of its contract with core provider Open Solutions (which was bought by Fiserv in January), Stanford FCU worked with The Raddon Group, a consulting firm Open Solutions acquired in 2006, on process improvement. "Raddon came out well before we went live with the new core system and looked at transaction times, process workflow, how we do reconciliation," Phillips says. "They timed and documented all that. Several months after we went live, they came back and reevaluated all those same things: How did we improve transaction times? Where do we have potential inefficiencies now that we've been on the new system for a few months?" The consultants recommended more efficient workflows, for instance in the area of loan fulfillment. After the new platform, called DNA, had been in place for a couple of months, Phillips' group realized that even though all employees had been trained the same way, they were handling processes, such as opening a money market account or billing a consumer loan, differently. After finding the most efficient methods, the credit union then retrained everyone on those.
On the telecom side, the credit union upgraded its phones and networks - including fibre switches, new routers and switches, new firewalls, multi-protocol label switching and data center equipment - just before the core conversion. It implemented unified communications and voice over IP from Cisco. The system includes presence awareness that tracks where people are and their status - on Outlook, on the phone, on a mobile device, in the office and available - and tying that into internally developed apps. Within the consumer fulfillment app, for instance, the unified communications could identify any consumer loan experts and their availability. A skills-based routing list suggests teams of experts for product and service features.
By replacing the PBX boxes and other older telecom infrastructure with voice over IP and unified communications, the credit union is saving about 60% in ongoing telephony costs, Phillips says. It uses videoconferencing to communicate among its four branches and corporate site, for branch manager and operational team meetings. The virtual call center team also meets regularly via video.
Going forward, the credit union plans to roll out video chat in its call center to provide support for members. Phillips' developers have begun building apps that work with the DNA platform using Open Solutions' DNAcreator toolkit, starting with an app that automatically refunds ATM fees to members who meet certain criteria. Other apps are designed to improve internal efficiency and streamline the back office.
Phillips says the credit union's ability to accurately analyze data and make sound decisions based on it has improved since the conversion. "We used to have so many disparate places we had to go," he says. "Data and analysis was always in question."
The credit union's financial system for general ledger and accounting is now integrated with DNA. Managers' dashboards and monthly reports are all based on the same set of data.
The new systems have allowed Stanford FCU to roll out mobile deposit capture for the first time. Mobile banking is truly integrated with the core system. "In the past it was a standalone product and we had to do a lot of stuff in the background to make that work well," Phillips says.
Where before, the credit union had several different lending systems, which created complexity and problems, now all of its loans - commercial, participation, consumer - are serviced on the same system.
Closing the books at the end of the month, which used to take several days, sometimes more than a week, is now done in days. Account opening and loan fulfillment times have improved. Back office processes such as statement production have improved; that process only takes a couple of hours now.
"We run our nightly process in less than 40 minutes," Phillips says.
SFCU tried to prepare its staff and members for the project through blogs with timelines, links to informational videos, and details on the differences and improvements they could expect post conversion.
In 2013, the credit union plans to integrate internal systems and innovate.
"We're devoting next year to member-focused innovation," Phillips says.
He's started up an innovation committee that will soon have its first session. Speakers from Google, VMware, Facebook, and Ideo will share ways to improve mobile and online banking. "I expect we'll see a push to deploy a person-to-person payments capability, whether that is partnering with a Facebook or Google or other electronic wallet program out there, so you don't have to carry your credit or debit card around," Phillips says.
- Penny Crosman