eStatements evolve from expense reduction to revenue driver.
E-statements have come a long way since their initial approval by NCUA in April 2000. Originally designed as a way to extend the convenience of electronic channels and save postage costs, e-statements are rapidly gaining acceptance as an important communication channel.
The Early Years - A Way to Cut Costs
In their original form (a static PDF document), e-statements were a way for financial institutions to save the costs of producing and mailing a monthly statement to members. E-statements were implemented at credit unions in a variety of ways - some credit unions even allowed members to choose both online and paper statements.
In the beginning, credit unions used both "push technology", sending the PDF to members via secure email, and "pull technology", sending an email notifying members that their statement was available at the credit union's website. The pull technology faced some challenges in the early days:
- Separate e-statement, bill pay and online banking programs meant
too many passwords for members
- Lack of broadband access meant slower statement viewing times
- Fears about phishing and identity theft
- Difficulties with downloading or viewing statements
As broadband access, online banking usage and security efforts grew, faster transaction capability fueled the adoption and growth of the self-service online channel.
The Teenage Years - Member Self-Service
Around 2003, new capabilities appeared including hyperlinked check images, HTML formatting, better design capabilities with smaller files, and a smoother access within online banking. These features ushered in a new era of self-service. In addition to getting statements a few days earlier than the paper version, members could now immediately access check images without going through member service representatives at the credit union - another way credit unions lowered their operating expenses.
The decreasing cost of storing electronic copies of member statements (and check images) enabled credit unions to counteract one barrier to use by enabling longer-term access to e-statements from previous years. Growing awareness of identity theft and prevention methods encouraged members to use e-statements to avoid mail theft and more closely monitor their accounts. As members' comfort levels with online banking and e-statements increased, more credit unions developed "e-accounts" that required members to adopt e-statements.
Instead of focusing on getting members to sign up for e-statements, some credit unions require e-statements for all members who use online banking. Known as the opt-out method, these credit unions simply list e-statements as a requirement for use, and include the acceptance of e-statements in their documentation. The savings can be substantial for credit unions - many are paying at least $1.00 per month to create and mail a paper statement. Once members agree to accept e-statements, few tend to drop out.
Credit unions in this phase also adopted marketing efforts within the e-statement channel, with the most adept providing targeted campaigns based on member product usage. So, for example, if a member already had a credit card with the credit union, the credit union eliminated that banner ad from the members' queue of ads.
E-Statements Today: A Strategic Communications Tool
Today, XML technology that allows easy integration of MCIF and member account data, is yielding even greater benefits to the credit union (and member) by enabling extremely targeted messaging both online with the e-statement and in the email notification. At this stage, leading credit unions have recognized the strategic advantages that email offers and are more adept at both asking for email addresses and using email to communicate with members and prospective members.
The latest breed of e-statements and their email notification messages offer many benefits to both the credit union and the member:
- Cost-effective marketing: far cheaper than mail, and more likely to be read
- Immediate call to action: members can click for more information or be encouraged to apply online
- Speed of development: an email can be designed, tested, and sent far quicker than direct mail
- Quicker way to communicate service disruptions or potential issues affecting members, such as fraud alerts
- Ability to reinforce the credit union brand on an ongoing basis: Monthly e-statement messages need to support the credit union's brand and reinforce the benefits of credit union membership.
Many credit unions are using more advanced database marketing capabilities to target e-mail communications to specific member segments or provide requested topics for financial education. The ability to split member email lists into groups and test different messages and designs allows credit unions to more effectively create email promotions that yield results. A single email campaign by Northwest Federal Credit Union brought in $1.4 million in new auto loans from a single targeted email broadcast.
Driving Adoption: A Win-Win for Members and the Credit Union
The environmental benefits of converting members to e-statements are becoming more important, and, as postal rates continue to increase, the cost savings benefit to the credit union increases as well. Thus, finding ways to drive adoption toward 100% of your membership is critical.
Some credit unions have adopted an "opt-out" method. Almost three years ago, Digital Credit Union decided to convert all of their active online banking users, more than 120,000 members, to e-statements. Only a few thousand opted to continue receiving paper copies. Other credit unions are finding success with ongoing e-statement sweepstakes or promotions, the difficulty is motivating members to act in addition to educating them on the benefits. Throughout 2007, State Employees' Credit Union (SECU) Raleigh, NC ($15.9 billion) ran a Million Dollar Sweepstakes to encourage member checking account holders to convert from paper statements to e-statements. Over 95,000 members chose to drop paper and go green.
Once viewed purely as a way to lower costs, today e-statements are recognized as a vehicle to grow new business. Credit unions are getting creative in their campaigns to drive adoption of e-statements, as well as proactive in turning what began as a simple concept into a dynamic marketing channel.