VoIP (Voice over Internet Protocol): Is it time for you to upgrade?

Interest in VoIP or Internet Telephony has been higher than ever. This technology is gaining a lot of recognition in the credit union community and is growing at a rapid rate. So is this the right time for you to think of an upgrade?

Interest in VoIP or Internet Telephony has been higher than ever. This technology has gained a lot of recognition in the credit union community and is growing at a rapid rate. In fact a leading vendor, who provides VoIP solutions, recently reported that they have 70-80% of their business coming from leading credit unions in the last two years. So is this the right time for you to think of an upgrade?

VoIP (Voice over Internet Protocol) is simply the transmission of voice traffic over standard data networks. VoIP technology uses a device which digitizes the speech signal. This device converts the analog voice signal to a digital bit stream on the sending side and converts the digital bit stream into analog on the receiving end.

In the past, some of the major issues that historically plagued the adoption of a VoIP system were stuttered voice or additional echo due to congestion in the data network. The VoIP transmission traffic failed to obtain sufficient network priority thatits real time mode required for good QOS (Quality of Service). Since, a VoIP system ran with other traffic, the risk of viruses and server replication was also prominent.

But now, with improvements in technology, all the above mentioned issues have been resolved to a great extent. The voice quality is as good as a traditional phone system and in certain situations has even surpassed the five-nines standard of voice communications. A VoIP system is cheaper to implement and has the advantage of being portable. Voice and data are able to co-exist on the same network, therefore the required infra structure is already in place for most credit unions. Withadvancement in VoIP system, credit unions are also enjoying offers advanced features such as enhanced conferencing solutions, web collaborations, live website chat integration, intelligent message routing and Screen Pops’ allowing staffto instantly view member accounts even before a call is answered.

A Credit Unions Perspective: Bay Federal Credit Union

In 2002, Bay Federal Credit Union (based in CA, Assets $557M, 8 branches) made a switch from their traditional phone systems to a VoIP system. Their old system had reached the end of its useful life and the cost of upgrading to a newer, similar systemwas huge. For example, under the traditional PBX system, connecting into an additional branch cost between $80K-100K. In addition, it was not possible for calls made to one branch to be transferred directly to the extensions of a specialist personin another. In short, Bay Federal’s phone systems had become a barrier to improve their member service.

According to Trent Mc Ilhaney, Bay Federal’s CFO, they choose a solution which was distributed and integrated so that a single server and management interface accessible from anywhere, could handle voicemail and administration for the entire multi-branchnetwork. It was a very easy system to implement and the entire conversion from their previous system to the new ones took less than 90 days. This system provided Bay Federal with tremendous flexibility as groups of specialist people from across theorganization could now act as a pseudo call center, people could even work from home, if necessary without missing any calls. Since the VoIP system was centralized, the back end became very easy to administer and new setups were just a point-clickfunction. Amongst other benefits, the cost of telecommunications had reduced; the loan facilitation & loan collections processed improved and the overall measured staff productivity went up.

As Trent explains, Whenever a new technology is implemented, it usually shows soft benefits and it is tough to see the value of your investment straight away. But in the case of VoIP systems, it was very easy to calculate the ROI, it paid for itselfwithin a year.


VoIP systems have improved tremendously over the last few years and have become a trend in the business world today. More and more credit unions are adapting it due to its flexibility, maintenance and reliability. As companies continue to develop phones,services, and plans that incorporate this technology, the potential for VoIP will continue to grow, providing credit unions with increased member benefits and operational cost savings.

April 22, 2016

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