With a tech-savvy membership base and nearly half of its 400,000 members living outside its branch network, New England’s Digital Federal Credit Union ($5.1B, Marlborough, MA) has made technology a high priority for some time. The credit union’s focus on remote services and accessibility has helped it operate more efficiently than its asset and regional peers. At midyear, its 57.64 % efficiency ratio bested the averages for all U.S. credit unions nationally, 79.24%, Massachusetts credit unions, 82.71%, and credit unions with more than $1 billion in assets, 72.41%.
In this Q&A,David Araujo, vice president of information systems for DCU, discusses how the multi-billion-dollar credit union has incorporated secure cloud storage into its overall strategy of serving members no matter where they are.
Why did DCU implement secure cloud storage for members?
David Araujo: We looked at where the market was going and recognized that many people are using cloud storage on a fairly regular basis already. For our members’ sake, they’d prefer to get something from their trusted provider — DCU — that includes the type of security and controls they are used to from their credit union. We provide the storage, in the form of Digital Mailer’s Virtual Strong Box, a bit differently and only make the virtual strong box storage available through our online banking channel.
How long has the credit union offered the service?
DA: It’s been just over a year. We had a marketing push when we first delivered the offering and had another round of marketing earlier this year. We’ve already doubled the number of members who have taken advantage of it since the beginning of the year.
Is there a fee for members to use the secure storage?
DA: We currently offer the storage box for free. When you look at other cloud storage providers, consumers are used to paying a nominal fee or getting the space for free. It’s tough to say we are going to charge you for coming through the credit union. We look at this as a value-added service from their trusted provider. It is different than other cloud storage solutions in terms of the level of security and privacy. Members know we cannot view their documents, which gives them greater peace of mind.
How much storage do you provide?
DA: When we first went live we offered up to 100 megabytes per storage box. We increased that to 500 megabytes for anyone who had taken advantage of the service. We will continue to monitor when members hit a certain percentage of their storage and then increase it if needed. If people are finding value in this service, then we want to give them additional space.
How does the secure cloud storage fit into your broader technology strategy?
DA: We have more than 400,000 members and roughly 40-50% are outside of our physical footprint. This means remote channels and online services are the most important thing we can provide to serve all members. We’ve always focused on the ability to deliver technology solutions so members can do business with us anywhere in the country. We want them to know they can do business with us 24x7 and they have the tools they need to interact with us online. Currently, 220,000 are considered online members out of the 400,000. So while we have a good penetration, there are still a large number of members who aren’t interacting with us online yet.
What other innovative technology products has DCU launched recently or found most successful?
DA: We launched mobile deposit early and were the first credit union to hit $1 billion in mobile deposits in March of 2011. Today, we have more than 100,000 mobile deposit users, so that has definitely been popular among our membership. We also offer mobile banking apps for iPhone, Android, and iPad. Members can pay bills through the apps, use remote deposit, and access our account manager, which is a self-service tool.
Tell me more about your account manager; what can members do with it?
DA: DCU’s account manager is a homegrown product where we deliver a lot of services to members. Members can do everything from uploading loan documents to filling out wire transfer forms. We have an inbox that is a one-way communication to our members. We use it for both operational and marketing messages such as notifying members of alerts on debit or credit cards or wishing a member a happy anniversary. We can also share pending authorizations on accounts so they know what holds are impacting their balances through the account manager functionality. All of this happens behind the PIN to ensure member security.
Has your technology strategy impacted how you market?
DA: When we do a targeted marketing effort, we discuss the right channels. We typically do a soft rollout through our account manager. It’s amazing how people just find the new functionality or message. We often see in the range of 30-40% of members taking advantage of pre-approvals, raffles, and other marketing messages, so we don’t always need to complement that with an email or direct mail offer.
Do you find that branch traffic has diminished with such a strong menu of online services?
DA: No, people still like to use physical locations. I don’t know that we’re ever going to get to the point that we see a downward trend in our foot traffic because we’re always growing. The audience that is coming into the branch is the younger demographic, which is somewhat counterintuitive. I’ve heard recently that they feel more comfortable coming in to get a loan, even though they are comfortable with technology for other types of transactions.