As technology evolves and old processes grow stale, credit unions must adapt their practices to the demands of the information age. But how does a credit union go about throwing out the old in the name of productivity and efficiency? Ent Federal Credit Union ($3.8B, Colorado Springs, CO) took a tip from Texas-based Randolph-Brooks Credit Union. In early 2011, Ent read a profile of the $5.5 billion credit union in which it endorsed Guidon Performance Solutions, a provider of business optimization services.
Ent had no glaring structural issues but saw the potential benefits in improving its productivity and efficiency. When Ent took the time to step back and re-evaluate its process, it found it wasn’t looking at them holistically, says Chris Chippendale, vice president of enterprise initiatives and electronic banking at Ent.
In the late summer of 2011, Ent brought Guidon to Colorado to spend two or three days on-site with its departments. Guidon observed the credit union’s daily activities, took notes, and interviewed employees to target the processes each department needed to improve. The Guidon process doesn’t offer solutions; rather, it finds inefficiencies and facilitates a dialog within the company. Using Guidon’s findings, 12 Ent employees came together in what Chippendale describes as “a lab environment” to brainstorm strategies for improvement. And as an independent voice without motivation, Guidon helped guide Ent through the most difficult part of the process, getting employees to critique their own process.
“People who do the job have a sense of ownership,” Chippendale says. “We wanted to infuse new ideas and use [an outside vendor] who would ask ‘why do you do this?’ If we got a good answer [from the review], that’s great. But if we didn’t get a good answer, then maybe that was an opportunity to make a change.”
Ent consulted with Guidon in 2011 and 2012. The first year, Ent cut the fat from its mortgage refinancing process. Ent’s slow application processing was forcing it to refund application fees. With new processes, though, it shortened its turnaround time, saved income, and improved member convenience. Ent reduced the number of steps in its mortgage refinancing process and trained its entire mortgage staff in each aspect of the process, which produced all-around gains in efficiency. Two years later, these new process remain the standard in the mortgage department.
In 2012, Ent worked with Guidon to build a new member application process with the goal of delivering the application to potential members in an expedited timeframe while clearly outlining the benefits of membership. It’s early in the process, but Ent has seen tangible benefits from this project. As of June 2013, membership has increased 4.79% year-over-year and net Income has jumped 21.72% in the same period.
More telling than individual projects, however, is the improvement in the credit union’s overall financial performance. Ent’s efficiency ratio was down from 73.53% at 4Q 2011 to 61.48% at midyear 2013. By comparison, the midyear efficiency ratio for credit unions with $1 billion or more in assets was 72.41% and 78.34% for Colorado credit unions. According to Search & Analyze data on CreditUnions.com, Ent’s second quarter revenue-to-operating expense ratio was 190.78%. Additionally, the credit union produced $322 in revenue per member and $86 in net income per member in 2013, each of which outpaces credit unions in its asset-based peer group. Such results indicate the credit union has translated its efficiency and productivity efforts into improved profitability.
Don’t Sweat The Small Stuff
The time and resources required to bring Guidon to Colorado Springs means Ent must prioritize what issues are worth professional consultation and what issues it can solve internally. The senior management team takes a lengthy look at processes to make sure the credit union attacks the right projects, says Chippendale. For the smaller issues, Ent uses techniques and best practices it has learned from Guidon to overcome any potential personal biases or resistance to change.
Ultimately, Ent looks to Guidon for ideas, changes, and insight into the people side of the process. By placing 12 employees in a room with Guidon consultants, Ent can better identify the weaknesses or breaks in the human process from those closest to it.
“We don’t want technology to solve the problem,” Chippendale says, “And we aren’t going to go out and hire 30 more people.”
Despite initial fears, “process improvement” is not code for “job elimination.” Ent does not want to improve efficiency by taking jobs away. Instead, the credit union approaches its process improvement initiative with the mindset that all employee work is valuable. By making jobs more efficient, it ensures more work gets done. By looking at its processes, Ent can determine what aspects are unnecessary and drive more value into its work.
“Once we got through that first process improvement event, people saw that it is about helping us do our jobs better,” Chippendale says. “People have become open-minded and have been more interested in coming to me and asking when we can do something in their department.”
Ent is in negotiations to bring Guidon to Colorado Springs for a third time, potentially in late 2013. In terms of improving efficiency and productivity, Ent feels as if it has barely scratched the surface of what is possible.