CHICAGO — With $4.5 billion in assets and more than 70 years of experience, it's perhaps not surprising that Chicago-based Alliant Credit Union long preferred traditional methods for member acquisition and service.
These methods, however, underwent a dramatic shift, as Alliant looked toward online automation to both cut costs while increasing branch productivity. The latest piece in that strategy was deploying an online account opening solution from Andera Inc. in Providence, R.I.
Existing strategies were no longer working well enough, according to an analysis of the Alliant-Andera engagement by Eva Weber of Boston-based Aite Group.
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While Alliant no longer limited its membership to United Airlines employees, its airline roots were sorely hampering business effectiveness. A third of Alliant's 11 branches are based in airports, locations non-conducive to member interaction and not particularly convenient for opening new accounts, Weber says.
Some brainstorming sessions resulted in the decision that online automation as the ideal solution for handling these shortcomings. Through automation, Alliant Credit Union aimed to reduce enrollment time by 50%. Such progress would be technologically impossible via its previous manual branch practices, Weber says of practices her report says yielded a lethargic 20-25 minute procedure for each account opened, a process the report says is ripe with resource and member-service issues.
Costs also had become a factor. Aite Group estimates that each account opened under manual methods costs Alliant approximately $8 to $10 in branch staff time (based on the industry average salary of branch representatives), totaling hundreds of thousands of dollars a year in member acquisition costs.
These numbers were only expected to rise in tandem with volume and business strategy changes, the Aite Group analysis says.
Finally, even if an alternate solution could be located, Alliant needed to ensure such an alternative was capable of handling a potential surge in new accounts.
In early 2006, the CU opened its doors to include employees at an additional, large-sized company. Alliant needed to guarantee that its new solution could not only handle significantly more members while providing better member service than its traditional method of account opening could provide.
In response, the credit union embarked on an aggressive strategy both for locating an automation solution and then implementing it, the Aite Group analyst says. After a brief search for possible partners, Andera was selected to automate its systems.
According to Aite Group, Andera's member service and implementation capabilities stood out as the two primary reasons for their selection.
Andera's Alliance interface was a packaged application solution, backed by pre-built and configurable system interfaces plus customizable screens and workflow. Alliant assigned a cross-discipline team of about a half-dozen staffers to ensure smooth implementation of the new system.
The new Alliant-Andera, Web-based solution moved traditional banking data online. It replaced paper-and-pencil access with online functionality for Alliant employees and members and added third-party data verification and authentification vendors.
Weber says the solution also is user sensitive, providing different workflow capabilities and on-screen views depending on who is accessing the system. Finally, cross-selling programming determines if such opportunities are present for Alliant's online members accessing their accounts.
"By automating the account opening process and implementing online account opening capability, Alliant can now offer enhanced convenience for its current and future members," Weber says in her report. "Based on Alliant's unique structure, this capability will be key in handling the large volumes of account opening activity that are often encountered through membership drives and bringing large potential member bases onboard," she says.
In a few months' time, the new Alliant-Andera system cut account acquisition time by nearly a third, Weber says. What was once almost a half-hour process became 8-10 minutes, on average. While consumers who enter brick-and-mortar, Alliant Credit Union branches still complete a paper application, overall time spent to open the account remains dramatically reduced, Weber says in her Aite Group "Impact Note" on the project.
Alliant managers also are able to quickly view branch and account trends via real time reports. The new online system likewise empowers branches to immediately capture assets, a strong improvement over traditional, physical processing of transactions, Weber says.
Since the online system's inception in May 2006, Aite Group says 13% of all new Alliant Credit Union customers opened their accounts through the Andera system.
More dramatically, according to Aite Group, the percentage of 2006 Alliant Credit Union auto loans, credit cards and home equity lines obtained online grew 90%, 68% and 77%, respectively, apparently as a result of cross selling.
Cost savings also resulted. Aite Group cites traditional branch cost for (physical only) member acquisition at $9.79. In comparison, the same in-branch member whose application is processed online costs almost half, at $5 each. Finally, acquisition of a "true" online customer–where the entire process from start to finish is executed online–is cheaper than sending a trio of text messages on a cell phone, at 25 cents each.
At its current 13% online acquisition clip and 1,500 per month volume, Alliant estimates an annual savings of almost $100,000 per branch, Aite Group says.
"While Alliant has already experienced increased account opening efficiency in-branch and online, it has also experienced significant cost savings. These savings can only increase with enhanced marketing efforts that are focused on driving more current and future members to the online channel," Weber says.
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