Boosting Satisfaction and Income: A Case Study

It’s not often that you can provide a service that saves members money and reduces their frustration, while generating fee income for the credit union. But that’s exactly what Central Florida Educators’ Federal Credit Union (Orlando, FL, $788 million, 109,000 members) has done with its implementation of a Courtesy Payment program. In just six months, the credit union has seen call center complaint calls drop, member satisfaction improve, and net fee income increase by an average of over $350,000 monthly.

 

By Users Incorporated - A Fiserv Connection

 

It’s not often that you can provide a service that saves members money and reduces their frustration, while generating fee income for the credit union. But that’s exactly what Central Florida Educators’ Federal Credit Union (Orlando, FL, $788 million, 109,000 members) has done with its implementation of a Courtesy Payment program. In just six months, the credit union has seen call center complaint calls drop, member satisfaction improve, and net fee income increase by an average of over $350,000 monthly.

“We pride ourselves on member service, so our primary goal with courtesy payment was to reduce member frustration – especially from overdrafts that result from a simple math error,” explains Executive Vice President Kent Lugrand. “Sometimes, that error throws the balance off just a few cents, causing the member to bounce a check.” These situations prove frustrating all around – as the member incurs merchant and credit union fees, and the credit union’s staff is tied up handling complaints and reversing fees. “We’d rather spend our labor dollars on positive services, such as communicating current promotions, opening new accounts, and enrolling new members,” Lugrand says.

Enabling a Solution

To develop a courtesy payment program that would be easy and efficient to set up, administer and maintain, Central Florida recognized the need for the right enabling technology. The credit union began by choosing the browser-based Courtesy Pay Manager solution from its core processor, USERS. This software enables the credit union to set up the criteria and business rules for courtesy payment, then automatically processes qualified overdraft payments and assesses the right fees to member accounts. The credit union also links Courtesy Pay Manager to a third-party package designed for tasks like member communication, disclosure delivery, and collections. Since both products are based on the pervasive SQL standard, they can share the necessary data automatically.

The resulting courtesy payment program at Central Florida differs from many in the industry in two respects:

  1. The service is offered to all checking account holders. “If you use creditworthiness as a criterion, the service may begin to look like a loan,” Lugrand says. “So we decided to take credit out of the equation.” Courtesy payment is automatically available to all 63,000 members with checking accounts, who must meet certain guidelines (such as keeping their credit union loans current) to retain the privilege.
  2. All members receive the same limit of $500. “In talking with industry suppliers and through our own research, we found that $500 is the magic number,” Lugrand says. At higher limits, the increase in write-offs starts to outstrip the incremental increase in income; at lower limits, the reverse is true, but the threshold may be too low to be valuable to members. So while Central Florida’s software supports multiple-tier payment programs, the credit union decided to extend the same limit of $500 to all checking account holders. “It’s enough to be useful, but not so much that members are continually behind the eight-ball,” Lugrand says.

Central Florida also extends the service on all types of inclearings, including ATM, ACH, debit and check cards. “We’re encouraging members to use electronic channels because it’s cheaper to clear an electronic transaction than a paper check,” he says. “We didn’t want our courtesy payment program to hinder that goal.”

Since launching the program in mid-September of 2003, Central Florida has seen outstanding results on all fronts. “Members are writing and calling to thank us for saving them money on the merchant side of the transaction,” Lugrand says. Call center staff is handling fewer complaints and spending more time on proactive sales. And while fee generation wasn’t the prime goal, the credit union has succeeded here, too: After write-offs, the program has generated an average of over $350,000 each month in additional fee income during the first six months of the program.

“Courtesy Payment fits very well with our philosophy and goals,” Lugrand says. “Our main focus was to deliver a checking service in a satisfactory way, and I believe we’re doing that. And as we train our call center staff to be ‘universal agents,’ the reduced volume of checking account service calls will allow them to spend more time on true income generating products, like mortgage, auto, and personal loans.”

For more information about USERS’ Courtesy Pay Manager or other technology solutions for credit unions, call 1-800-523-7282, ext. 1548.


 
 

April 26, 2004


Comments

 
 
 
  • horrible
    Anonymous