Is Now The Time To Combine Deposits And Payments?

Service trumps rates at Ascend FCU, where an integrated approach aims to maximize engagement and loyalty.

 
 

Top-Level Takeaways

  • Ascend FCU is combining deposits and payments with the aim of reducing friction points in member service.
  • The move has prompted a shift in how these areas are viewed, from service centers to profit centers.

As deposits soar, Ascend Federal Credit Union ($3.2B, Tullahoma, TN) is rising to the occasion with an internal reorganization aimed at leveraging the inherent value of deposits and payments to member service and the bottom line.

The Nashville-based cooperative is in the early stages of combining its deposits and payments people and processes into a single group, says Josiah Leverich, who joined Ascend in May 2019 and in late 2020 took over the new role of senior vice president of deposits and payments.

Josiah Leverich, SVP of Deposits and Payments, Ascend FCU

“Positioning deposits and payments under the same leadership recognizes the relationship among deposits, payment channels, and digital experiences — a relationship that’s becoming the key focus in growing member relationships,” Leverich says. “We’ve traditionally viewed these departments primarily as service centers. Given the importance of the deposit and payment cycle as a generator of both revenue and loyalty, it makes sense to view these areas as profit centers.”

But it’s not just Ascend that is taking a renewed look at its business. After years of rock-bottom rates, members also are viewing deposits differently.

“Traditionally, deposits have been a highly price sensitive product, but that’s changing as more consumers are looking for convenience over rate,” Leverich says. “We’re using this reorganization to be more proactive in identifying member friction points and enabling self-service opportunities where it makes sense.”

The credit union’s focus is on balancing activities, so the reorganization is primarily taking place in the accounting department. Fortunately, that group’s leader has a technology background and understands how technology can improve processes and modernize stale activities, Leverich says.

“The end game is a payments experience that drives loyalty and encourages members to always consider Ascend when they have a financial need.”

Josiah Leverich, SVP of Deposits and Payments, Ascend FCU

The work has just begun. The credit union started by evaluating processes and systems and focused significantly on its vendor evaluations, which it conducted with an eye toward identifying changes, Leverich says.

“The end game is a payments experience that drives loyalty and encourages members to always consider Ascend when they have a financial need,” the Ascend SVP says. “We also want to improve our ability to use the payments data to better understand our membership and make relevant, timely offers.”

6 Ways To Combine Deposits And Payments

Josiah Leverich, SVP of deposits and payments at Ascend FCU, shares six principles behind his cooperative’s internal reorganization.

  1. Recognize the need for more generalized service channels.
  2. Map processes to identify friction points from the member perspective. Understand how all channels relate to one another.
  3. Evaluate the value of every process. Which ones could be better? Which ones are no longer needed?
  4. Understand the credit union’s vendor landscape. Which resources are not performing well? What functionality is better served within the core versus outside?
  5. Look at all areas to create value for products and services that are not price driven.
  6. Create value through differentiation and service levels versus relying on price.

Strong growth in both deposits and loans underlies the reorganization and new emphasis on an integrated experience for Ascend members. According to Leverich, compound annual deposit growth for the cooperative has been nearly 14% for the past four years. For loans, it’s slightly more than 15%.

“We’ve obviously seen a deposit surge in the past 12 months due to stimulus payments, but we were already seeing good deposit growth due to our branch expansion strategy that started about five years ago.” Leverich says. “Since then, we’ve increased our number of branches by 70%.”

According to the senior leader, indirect auto lending and mortgage refinancing have been the major drivers of loan growth. For deposits, the cooperative estimates that for every $1 in new deposits at a new branch, there’s $4 in new deposits at existing branches as a result of greater brand awareness and perceptions of convenience.

“Members will use remote channels for lending but still want to be somewhat close to their deposits,” Leverich says.

Changes in process and technology have contributed to more positive perceptions. According to Leverich, ITMs have allowed the cooperative to reduce the size of its average branch footprint by more than half; however, most account openings still occur in branches. Improving its digital onboarding within that process is now part of Ascend’s strategy.

CU QUICK FACTS

ASCEND FCU
Data as of 12.30.20

HQ: Tullahoma, TN
ASSETS: $3.7B
MEMBERS: 225,746
BRANCHES: 29
12-MO SHARE GROWTH: 23.19%
12-MO LOAN GROWTH: 7.88%
ROA: 0.91%

“We want the experience to be somewhat similar to a cellphone retailer where members physically acquire the phone but receive guidance to enable self-service via digital channels,” Leverich says.

The cooperative is still in the early stages of the reorganization, but Leverich says he’s already taken note of a few lessons learned.

“We encountered some challenges by trying to over-specialize areas such as our call center,” he says. “Most of the time when a member has a single issue, it has many overlapping parts between deposits, payments, and digital channels. You can create a worse member experience by over-specializing these service points and creating multiple handoffs. We have reverted back to a more standard contact center structure as a result.”

“Be methodical in prioritizing and scheduling changes. Do not create member friction by trying to resolve problems that are not fully understood. View the approach as a marathon rather than a sprint.”

Josiah Leverich, SVP of Deposits and Payments, Ascend FCU

For parting words of advice, Leverich cautions credit unions to not get ahead of themselves.

“Be methodical in prioritizing and scheduling changes,” Leverich says. “Do not create member friction by trying to resolve problems that are not fully understood. View the approach as a marathon rather than a sprint.”

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