Battle Of The Branches: A Change In Operations

Technology can create branch efficiencies and versatility while enhancing member convenience.

 
 
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To prepare itself for a more effective, efficient, and profitable future, Coastal Federal Credit Union ($2.1B, Raleigh, NC) spent two and a half years converting its 15 branch locations from a traditional teller line model to one that incorporated 63 personal teller machines (PTMs). Now one year into this model, Coastal has reduced teller costs by more than 40%, steadily grown its net promoter score, increased platform sales by 78%, and hit its third consecutive record year for net income levels,  says Willard Ross, senior vice president and chief retail officer.

PTMs cost about the same as a high-end ATM, but they are not ATMs and they’re not self service, he says. Each comes equipped with a screen and a phone headset for members who are concerned about privacy. At the push of a button, the member is connected to a live representative who walks them through the transaction. PTMs units currently accept cash and checks and distribute cash, checks, coins, and receipts.

The system does not rely on pneumatic tubes, which allows Coastal’s 40 PTM employees to work in a single unit under one manger and five supervisors at a centralized location.

“The employees like the ability to all be together and its makes training more consistent and effective when it’s under the same roof,” Ross says. “It’s fast, but it’s also personal, so members have a real face-to-face interaction.”

An Operations Upgrade

With PTMs, tellers never physically touch currency, which has the added benefit of reducing illness and sick days. And they can jump from unit to unit to pick up the slack in a swamped location.

This flexibility has also helped the credit union become more efficient in its hours of operation.

Most branches underperform for several reasons,” Ross says. “One is that they work on banker’s hours and most members don’t like to take a long lunch or leave work early to do a transaction.” The PTMs helped Coastal respond to these preferences and extend its working hours by roughly 86%.

“This is a real differentiator and we’re seeing it in the number of checking accounts we’re opening,” Ross says.  Coastal currently opens more than 1,000 new accounts a month.

Because the credit union worked one location at a time and highlighted the benefits of the new model firsthand, resistance from membership was nominal. To date, the credit union hasn’t lost a single member because of the teller shift.

“We started with promoting the extended hours because that’s the most tangible benefit,” Ross says. “Members will realize later that it’s still warm and personal and much faster, but they won’t believe that until after they start doing transactions at 8 a.m. on a Sunday morning.”

Building A Better Workplace

The units have not just affected the members experience but the employee one as well. With typical industry turnover of around 40%, teller expense is a huge cost and a drain on normal branches.

“Our vision is to have the best tellers in the area lined up on a waiting list wanting to work here, because of the safety and the opportunities this environment provides,” Ross says.
 
The credit union raised the pay grade level for PTM position by one notch and tellers had to demonstrate that they were good on video and flexible with their work schedule to win a spot. The credit union did offer a stay bonus for those who did a good job but weren’t able to find a position in other roles, but because of the long conversion time and natural attrition trends, it only ended up paying that to a handful of people. 

“We have a teller Levels of Achievement Program, where high performers can learn extra skills,” says Ross. “Each level is 5% more in pay, because we don’t want them to feel the only way to get promoted is to take a role that might not fit their talent, such as a supervisor or as management.”

Focused And Adaptive

Reducing teller concerns and administrative needs also frees branch managers from the role of operational experts, and allows them to focus on being good sales managers instead.  In 18 months, Coastal has increased its sales per full time employee, per day, from 1.58 to 2.8.

“We don’t count fluff sales like debit cards,” Ross says. “This is loans and deposit accounts.”

One representative in every branch location now receives the same training as the credit union’s dedicated mortgage workforce, which has allowed branches to produce up to 35% of the each month’s mortgage applications and closings.

PTMs can also lower branching costs and create flexibility in the branch footprint. One Coastal branch at a Lenovo Headquarters measures just 400 square feet and features one PTM unit and one small office for a sales rep.

“We don’t always need to have a 6,000-square-foot branch on a two-acre lot,” Ross says. “There are all kinds of options with PTMs.”

 

 

 

Nov. 5, 2012


Comments

 
 
 
  • Excellent article, branching is always a long discussion at our credit union, serving our members and weighing costs. What do we do for generation Y and X. And our older members like the brick and mortar . This sounds like a good solution. Do the senior members of your credit like it?
    Roland
     
     
     
  • WOW, never heard of this before. As a teller, I am intrigued. The high turnover of teller staff is an issue. Anything to keep employees and make them more efficient is awesome!
    Anonymous
     
     
     
  • We've looked into this units. We are, however, trying to fully use tech tools we have. For instance, we are heavy users of DocuSign. This is used in our eServices group to have members sign loan docs and account modification forms. Branches are using DocuSign to do loan closings. This saves the member a lot of time eliminating the need to return to the branch. The member can sign their loan docs at their convenience and the funds can be dispersed as agreed. Our members love this simple solution. It works via a computer, smart phone or tablet.
    Jim Johnson
     
     
     
  • Significantly reduced teller costs and steadily increasing net income -something to put serious thought into for the future.
    Anonymous
     
     
     
  • The article was very informative. An excellent way to cut cost and still maintain a high level of service.
    Anonymous