Pooled resources keeps community credit unions competitive

Today, Oct 2000 by Micale, Dan

In today's financial industry, professional, knowledgeable and responsive service is what sets institutions apart. And nowhere is that more true than with credit unions, who battle larger banking rivals by giving their members special services and attention to retain their loyalty.

More 350 credit unions in Wyomingand Colorado rely on the support of corporate credit union process Colleague Services Corporation (CSC, 303-427-4222/www. colocu) to provide share draft and remittance processing. Like many processing centers, CSC is upgrading its item processing system.

Through group buying power, CSC is able to reduce the cost of services to its member credit unions. Partnering this way to provide customized customer service has been one way credit unions can compete with larger banks.

"Our experience shows that, due to their cooperative nature, credit unions and community banks are more likely to be a part of cooperative ventures," said Dan Micale, director of Financial Transactions at CSC. "They also gain the cost savings associated with pooling their resources. This staff expertise is especially appealing to credit unions in today's tight labor market," he said.

Based in Arvada, Colorado, CSC offers a variety of services, including financial planning, marketing, internal audit and accounting assistance, procurement of supplies, share draft (check) processing, mortgage lending, oversight of plastic card programs, printing, employee recruitment and management of auto-buying programs.

CSC's core business is centralizing share drafts and payment stubs, verifying the accuracy of payments, and preparing the transactions for posting to the correct accounts at the appropriate credit unions. Each day, CSC processes an average of 400,000 share drafts, with a peak volume of 600,000. By the year 2002, the company anticipates an average daily volume of 500,000 drafts. The company performs 80% of all share draft processing for credit unions in the State of Colorado and retains a 75% market share in Wyoming.

On the remittance side, the company currently processes 7,000 to 15,000 credit card payments, loan payments, and other forms of remittances daily. The remittance volume is expected to double once CSC begins to process auto and mortgage payments.

Historically, CSC worked in a microfilm environment using an IBM 3890 sorter and DOSCHECK as an item processing system. However, a combination of explosive growth and a demand for image processing spurred the company to seek upgrade solutions. With image processing, credit unions can more quickly and efficiently answer members' requests for information about past transactions. Specifically, CSC needed better retention, storage, and retrieval of check images, and an e-commerce solution for its member credit unions.

"Imagine a credit union whose members write one million share drafts a month. It can be a true challenge to provide fast and accurate information when a member calls with a question about one particular share draft," said Jim Geraud, who was CSC's manager of Information Technology during the transition. "Image processing enables us to provide those records in an easy-to-use format that gives the credit union instant access."

CSC needed an automated system that would allow documents to be imaged and stored on optical media and CD-ROM. The company could then provide information to its member credit unions by CD-ROM, fax, or by posting capture files through network file transfer protocol capabilities. CSC also needed to be able to offer archival research services for its member credit unions.

"We wanted members to have the ability to get copies of share drafts over the Internet. And we didn't want to deal with multiple vendors. We needed a one-stop solution for both share draft and remittance processing," says Micale, the current manager of the new system.

After evaluating major check/remittance processing systems vendors, CSC chose Wausau Financial Systems (715-359-0427/www.wausaufs. com). The implementation was staged in several phases, with remittance processing in place well before the share draft processing and imaging were installed.

Geraud cautioned against vendors that lacked specific remittance processing expertise. "It became apparent that some vendors had item processing systems that had been retrofitted to perform remittance processing," he said. "A system designed from the beginning as an application for remittance processing makes a visible difference."

"Image automation has benefited the credit unions we serve, in many ways," said Micale. "We gain speed and efficiency by having the ability to provide large amounts of data via the Internet. Credit unions have traditionally truncated the drafts, providing copies to members only upon request. Now we can digitally provide all drafts to credit unions to use in their PC banking services and internal DPs."

As credit union IT managers evaluate the many choices available to them, Micale stresses the economic advantages gained through cooperation.