web services: it is not if, it is when!
DESCRIPTION
Gary Hess,TRANSCRIPT
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WEB SERVICES:
It is not IF,
it is WHEN!
Credit Union Products and Services – Sep. 2011
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Agenda
• Survey
• Technology Today
• The Market
• Web Services
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Survey
• How many have a web service at the credit union today?
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Technology Today
• 2010 – Est. 10% to 12% of Financial Institutions offer web account opening (Javelin)
• May, 2010 – Javelin Report – 1400 Financial Institutions offer web account opening
• 2011 – 25% of all software will be delivered as “Software as a Service (SaaS)” – Gartner Group
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Lieberman Research July 2010
• Total Institutions Surveyed 46% evaluating online applications today
63% plan to implement by 2012
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Lieberman Research – July 2010
• Credit Unions 82% somewhat or very familiar with technology
20% of mortgage applications taken online today
31% of mortgage applications expected to be taken online by 2013
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The Market Today
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Members
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Credit Union Membership
• 1980 – 43.9 million
• 1990 – 61.6 million
• 2000 – 79.8 million
• 2010 – 91.4 million
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U.S. Census Bureau Predictions
0
5
10
15
20
25
30
<5 10-14 20-24 30-34 40-44 50-54 60-64 70-74 80-84 90-94 100 +
2003 2025 2050
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Where to look for Growth?
• Average age of credit union member is 47 (CUNA Mutual Group)
• USSCO Federal Credit Union lowered the average age of its membership base from 45 to 38 by implementing youth and junior services programs. They invested in technology to provide the speed and convenience demanded by younger members.
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Why Web Based Banking?
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(negative) Economic Factors
• Outside forces impact on your bottom line: Share insurance
Corporates
Overdraft services
Interchange fees
Regulatory costs
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Implementation Reasons
• Better serve borrowers
• Efficiency
• Wave of the future
• Increase volume
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2011 WEB SERVICES
Is it the same as Online Banking,
Or is it MORE??
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Strategic Direction
• Online Banking – Convenience for the member
• Web Services = GROWTH + EFFICIENCY
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Online Banking vs. Web Services
• Online Banking
• Account Transfer
• Balance Lookup
• Pay Bills
• Account history
• Online statements
• Web Services
• Gain new members
• Gain new loans
• Cross sell
• Cost reduction
• Marketing
• BSA/AML
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Cross Selling ROI
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Cross Selling ROI Annual Number of Loans Processed 3,000 Annual Number of New Relationships Processed 1,500 Values of Fields in Green Can Be Adjusted By You
Tangible ROI
Cross Selling Success Projections
Additional Revenue
Anticipated Increase in Loan Volume 5% $150,000.00 Average Income per Loan $1,000.00
Anticipated Increase in Loan Revenue from New Relationship Transactions 5% $75,000.00
Average Income per Loan $1,000.00 Consumer Protection Products/Insurance Participation Anticipated Increase in Loan Insurance 5% $22,500.00 Average Income per policy $100.00 New Consumer Acquisition via Xpress Accounts Additional Consumers via Online Channel 150 $75,000.00 Ave Income per Consumer $100.00 Average Length of Relationship 5
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Cross Selling ROI
Reduced Labor and Processing Costs Current Time to Process New Loan 35 $20,625.00 New Time to Process New Loan 10 $8,250.00 Current Time to Process New Consumer 35 $10,312.50 New Time to Process New Consumer 10 $4,125.00 Average Cost of Labor with Benefits $16.50 $18,562.50Reduced Systems & Administrative Costs Integrated Member "Switch-Kit"
Integrated Mortgage and Business Lending Module
Robust Reporting Capabilities Paperless Workflow Costs Savings
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Cross Selling ROI
ROI Income/Savings $322,500.00At $8 Per Application Annual System Cost (based on projected volumes) $39,000.00 Bottom Line Net Revenue Gain from LoansPQ $283,500.00
Number of Cross Sold Loans Needed/Month to Cover System
Cost 3.3
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Account Opening
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Disclosures
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Data Collection
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Identity Verification
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Funding
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Switch Kit
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LENDING
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Collateral Information
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Borrower Information
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Financial Information
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Cross Sell
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Cross Sell
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MARKETING
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Creative Customization
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Creative Management
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Customized Creative
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Process Changes
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Different Goals
• Yesterday
• Complete the process
• Collect the funds
• Meet all of the requirements
• Today
• Grow the membership, deposits and loans
• Cross Sell
• Become a trusted advisor
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Yesterday’s Process
• Stand Alone Personal Computers
• Networked Personal Computers
• Web Applications Print and Submit
Complete and Submit
• Paper and Physical Signatures
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Today’s Process
• Web Banking Member data collection
Product selection
Member verification
Funding
Paperless
• Signature Key Pads
• E - Signature
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Credit Union Benefits
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Credit Union Benefits
• Growth through: Web applications – available when your member
needs them
Generation X and Y – Doing business in a manner familiar and preferred by them
Trusted advisor – helping your member improve their financial position
Cross selling – guaranteed, period!
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Credit Union Benefits
• Productivity Gains
• Cost reductions
• A system that pays for itself
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Real Life Example
• Louisiana Federal Credit Union, LA. 2004 to 2009 – tripled its mortgage volume
2 person staff – no increase in staffing
Web based application
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THANK YOU
• Gary Hess
• President, RTE Financial Services
• 1-320-281-9765
• www.rtefs.com