The Interactive Banking Experience

LAFCU implemented interactive teller machines nearly three years ago. How did the Michigan cooperative encourage members and employees to adopt this new technology?

 
 

The original field of LAFCU ($593.1M, Lansing, MI) allowed it to serve those working in the automotive industry. Although its name no longer means Lansing Automakers Federal Credit Union — LAFCU is no longer an acronym of anything — the credit union still conducts a robust business within the automotive and manufacturing sectors of central Michigan.

Three years ago the credit union changed its charter to serve 11 counties in the Lansing area. With that switch, the credit union examined its technology offerings. LAFCU had, historically, been a technology follower, says Brian Wixson, the credit union’s chief information officer. Although not always first to market, it kept up with industry trends.

CU QUICK FACTS

LAFCU
Data as of 06.30.15
  • HQ: Lansing, MI
  • ASSETS: $593.1M
  • MEMBERS: 58,249
  • BRANCHES: 9
  • 12-MO SHARE GROWTH: 2.05%
  • 12-MO LOAN GROWTH: 12.14%
  • ROA: 0.25%

When it switched to the community charter, however, it wanted to do more than follow. It wanted to lead.

“We’ve started working on technologies we think are going to allow us to differentiate ourselves in the marketplace, provide better services to our membership, and create efficiencies,” Wixson says.

With this new outlook, LAFCU introduced interactive teller machines — or ITMs — with the expectation they would provide benefits such as longer work hours and a better-trained employee base.

LAFCU Goes Interactive                                      

LAFCU originally considered implementing personal teller machines (PTMs) but ultimately decided to purchase ITMs because it wanted a technology it could deploy in its drive-thru lanes as well as its branch lobbies. Today, LAFCU has seven ITMs in operation across its nine branches — two inside branches and five at the drive-thru — and will install an eighth machine in mid-September.

LAFCU preferred the drive-thru ITMs for a variety of reasons, one of which is the ease of adoption.

“We felt the change for our membership to use an in-branch ITM was going to be more difficult for us to bridge than the drive-thru,” Wixson says.

In the drive-thru, the credit union was already using two-way video with pneumatic tubes that passed back and forth between member and employee. The ITM replaces the tubes with a machine that accepts and disperses cash and checks directly. The interaction is similar to the two-way video, which makes acclimation easier.

The credit union plans to install ITMs in all its drive-thru locations by the end of the year — it recently signed an order for six additional machines — but it hasn’t ruled out introducing more in its branches.

The Benefits Of An ITM

LAFCU implemented ITMs because it wanted to increase its overall efficiency. According to Callahan’s Peer-to-Peer software, LAFCU’s efficiency ratio in the second quarter of 2015 — 93.99% — is the highestit's been since first quarter 2012, although it still lags behind its asset-based peer group’s midyear efficiency ratio of 83.23%.

LAFCU implemented the first of its ITM systems three years ago, and Wixson believes the credit union can achieve greater efficiency by increasing its number of ITMs.

“You need to have multiple systems to justify the cost,” Wixson says. “We feel like we need more than eight before we have enough transactions to justify the cost.”

Even as the credit union deploys more ITMs, it is having internal discussions to keep drive-thrus open an additional three hours every day, according to Wixson. 

ITMs offer a lot more efficiency. Staff members are in a central location, and when one drive-thru is slow, they are able to serve another member at another drive-thru. 

It takes only two to three employees housed in the credit union’s headquarters to staff all seven ITMs. Today, the credit union requires at least two tellers per branch to handle in-branch and non-ITM drive-thru transactions.

“No matter how well you schedule it there’s always downtime,” Wixson says. “ITMs offer a lot more efficiency. Staff members are in a central location, and when one drive-thru is slow, they are able to serve another member at another drive-thru.”

However, Wixson says the addition of ITMs won’t reduce the number of staff members. Rather, the credit union will cut hours or reassign tellers within the organization.

The ITMs also offer a more standard member experience. The employees’ stations include a computer and video feed, which LAFCU attaches directly to the computer monitor to ensure employees never turn away from members as they work. Additionally, LAFCU trains ITM staff to make sure their location on the screen does not change from day-to-day. And staff members also make sure the camera zoom remains constant and is adjusted properly. Even the chairs remain at the same height.

“Instead of 18 people in different branches all doing it a little differently, having a smaller group of people keeps it more consistent,” Wixson says.

From a staffing perspective, ITMs allow employees to focus more on the walk-in member rather than the drive-thru. And more ITMs introduce the possibility of providing a larger branch footprint with locations that require less square footage and are less expensive to construct and maintain than LAFCU’s current locations.

To show the value of ITMs for employees, LAFCU has held training sessions for its tellers and even brought in a national video conferencing trainer. The credit union must train staffers on the ITM system, but the skills and personalities required of a successful drive-thru teller translate directly to the ITM, simplifying the training process.

Results And Next Steps

As of September 2, the credit union is processing more than 700 ITM transactions per month. And that figure is growing fast, says Wixson, who expects to hit 1,000 per month in the next few months.

“Some people only transact in-branch,” Wixson says. “That’s what they do. But we’ve not had any complaints telling us they don’t like this.”

One concern the credit union did have was in how to train the member. LAFCU was one of the earliest adopters of ITM technology in Michigan; therefore, members had little, if any, experience transacting in such a way. That’s one reason the credit union strives for a standardized experience.

As more machines are implemented, to make sure the credit union gets the efficiency gains it hopes for and members can’t purposefully avoid the new technology, LAFCU will install new ITMs in the first — i.e., primary — drive-thru lane. It will also make only ITMs available during slow times.

“If it’s slow, they might not have a choice,” Wixson says. “They are going to have to use the ITM. We will drive traffic to it.”

 

 

 

Sept. 7, 2015


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