Waste Not, Want Not

How to use readily available resources, people, and technology to trim the excess and hit your efficiency stride.

Even when operating in a cooperative system, a little bit of self-reliance goes a long way.

With 18 branches, shared access to a network of more than 20,000 ATMs, and rapidly advancing online and mobile options,Redwood Credit Union ($2.1B, Santa Rosa, CA) offers a broad spectrum of services for its 224,000-plus members in multiple counties, including Sonoma, Marin, and San Francisco.

Although the credit union recognizes that these services come at a cost, it also knows that using the right strategy can do much to help control the final price tag.

As of 4Q 2012, Redwood spent $83 less per member than its peers without sacrificing service quality or its capability for building profitable relationships. In that quarter, it also grew membership 6.4%, maintained an average member relationship nearlydouble the norm for its asset size, and achieved a significant 1.59% return on assets.

Callahan & Associates | www.creditunions.com

Generated by Callahan & Associates’ Peer-to-Peer Software.

This year, Redwood plans to use two-person executive committees to research, develop strategies for, and measure its progress toward key institutional goals, including lending, net worth,brand development, and efficiency.

Andy Ramos, senior vice president of member experience, currently oversees Redwood’s branches, call center, and business development efforts. Along with the credit union’ssenior vice president of technology, Ramos also heads the efficiency committee.

We have a reputation in our branches for making each visitor feel like they are the most important person there, Ramos says. But alltoo often we’re managing transactions when we should be building relationships. Now, our challenge is to move some targeted transactions including deposit withdrawal, loan payment,and new accounts outside of the branch network and into self-service options without losing relationship quality.

The credit union’s committee structure isn’t designed to replace consultants altogether, but it is intended to reduce reliance on those parties for basic improvements that can be addressed more quickly and affordably in house.

Eliminating what Ramos calls the low hanging fruit also helps Redwood maximize the value of its paid consultants, which it plans to lean more heavily on at the end of this year and into early 2014.

Success for Ramos’s particular committee hinges on hitting several goals. For example, the credit union wants to further improve its efficiency ratio,a metric for gauging how much is spent to generate every dollar in revenue. Redwood hopes to lower its ratio, currently at 58.36 %, according to Callahan & Associates’ Peer-to-Peer software, to at least 55%.

Redwood also wants to increase the percentage of total transactions that its electronic channels handle from current levels roughly 60% of all transactions to at least 70%, while also using advanced reporting capabilities to track thatdata more efficiently.

Callahan & Associates | www.creditunions.com

Generated by Callahan & Associates’ Peer-to-Peer Software.

We don’t have unlimited resources, so really we want to unclog all the transactions that take away from our branch experiences and create something better for our members, Ramos says.

To help facilitate these changes, the efficiency committee conducted a thorough audit of various processes in the branch, as well as the call center and in all electronic channels,seeking out any barriers that might prevent member transactions from migrating to self-service options.

When finished, the team had identified 24 improvements on both the employee- and the member-facing side of the business that would have a substantial impact on institutional efficiency.

Some of the improvements Redwood made included:

  • Fraud forms and other hard copies of forms which previously were printed out from an internal database, completed by hand, and sent through a courier were digitized and incorporated into the core system so they could be filled outand sent electronically to the right departments.
  • Account closures that once required multiple manual steps (including posting dividends, making withdrawals or transfers, and canceling various cards associated with the account)were replaced by one universal transaction that, after prompting the user with a few questions, handled all of those processes at the touch of a button.
  • A new online banking program was launched with additional features such as budgeting tools, calculators, and a streamlined account-opening process as well as the development of an upcoming online loan application process.
  • An enhanced process updates rate sheets simultaneously on the intranet, the member website, and any other areas where those documents are stored.
  • A Who search tab allows representatives to pull member data out of core systems using a phone number, social security number, or any other identifying information.

The credit union also boosted its technological capabilities by adding a cashless branch model at its headquarters and by capturing deposits made at ATMs or through its mobile suite. Redwoodis also working on developing the capability to offer bill paying through its ATMs to create a fuller spectrum of branch-like services in this channel.

These technological improvements are often partnered with awareness campaigns directed at the membership as well as training and internal performance goals to help shape employee behavior.

Our employees also need to understand all of our technology and be able to explain to members why something might be done more efficiently in another channel, Ramos says. But we also want our employees to feel successful and valued.Through this extra training, we’re helping to put them on a more long-term career path with the institution.

June 6, 2014

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