Uncovering hidden cost centers: What is that obsolete technology really costing you?

Originally published on CU Insight on 9/12/2014

By Andrew Tilbury

Document imaging systems are meant to be tools for improving credit union operations and empowering employees to provide better service to members. However, a survey conducted last year showed that 75% of the credit unions surveyed reported running a document imaging system that was at least five years old. Many of the systems currently in use at credit unions are no longer being updated and are creating more problems than they are solving. Older systems are unable to handle new document types, create artificial silos that separate different types of documents, and require significant manual processing to scan, index, and archive documents. The same survey found that there is nearly universal dissatisfaction with these legacy systems and as well as widespread acknowledgement of multiple pain points related to maintaining and using them.

Rather than helping employees more efficiently provide better member service, outdated document imaging systems actually hinder member service, frustrate employees, and drive increased operational costs. Many of these older systems do not integrate well with new loan origination or electronic signature solutions and are prone to security breaches. As credit unions try to maintain their member, asset, and loan growth trends of the past few years, they will need to update their systems to scale for growth, maintain member service levels, and minimize as much as possible the burden on their IT departments.

Cabrillo Credit Union’s 5-Year Plan: Cut Costs, Improve Member Service

San Diego-based Cabrillo Credit Union ($210m assets) competes with the nation’s largest financial institutions that are saturating the area with large branch networks and a wide range of innovative products. With only 5 branches, the costs of keeping up with the service offerings of these commercial banks, combined with maintaining the low fee structure and competitive rates that are part of its mission, presents a significant challenge for the credit union. This is a common theme among credit unions nationwide that are striving to compete with commercial banks and their massive IT budgets.

To combat these challenges, Cabrillo CU recently completed a 5-year strategic initiative to transform its information systems, including a core conversion, installing an electronic signature system, and replacing a 10-year old document imaging system. According to Cabrillo’s CTO, Frankie Dueñas, “Document imaging is as important to us as our core processor.”

Since completion of the multi-stage process, the credit union has noticed the following operational and service improvements:

  • 35% reduction in overall paper usage
  • Creation of a 20% surplus in employee time previously spent on printing and scanning documents at each branch, now redeployed to member-facing roles
  • 50% reduction in the daily work required to manage the storage of e-signed documents achieved by automating previously manual processes
  • A substantial reduction in courier services between branches from a rate of 100 sheets a week to zero, effectively eliminating the security risks associated with transporting paper documents.