By Ray Birch
SCOTTSDALE, Ariz.—Lots of credit union staff report they are working hard, but are they hard at work at things that really matter?
Cornerstone Advisors is reporting it has found a lack of system integration and metrics that drive down to department and employee levels have many people doing a lot of busy work but failing to be productive.
“A lot of people we talk to at credit unions say we are so busy, we can’t imagine being more productive than we are now,” said Sam Kilmer, senior director with Cornerstone. “But in reality many credit unions are busy doing things wrong. They are not automating enough processes, they are not process oriented, and in lot of cases they are burning up a lot of resources unnecessarily.”
The problem is two-fold, explained Eric Weikart, managing director at Cornerstone. As the result of systems not being integrated, credit unions are duplicating efforts, especially around data entry, he said. More important, all that extra time on unnecessary activities is taking away from staff focusing on those jobs that drive deeper relationships and grow the business.
Weikart said that 75% of credit unions’ time spent with new members involves computer input of data versus building relationships through conversations. In addition to CUs not using employee time effectively with new members and when opening checking accounts, they need to improve processes around originating business loans, document management and signing, and monthly statements.
Not having benchmarks and metrics to track staff performance is a critical issue as well, Weikart explained.
“Credit unions need to instill in their employees a sense of accountability,” Weikart said. “You take for granted that most credit unions use benchmarks and metrics to gauge performance, but in reality that is generally not being done. You see CU-wide metrics, but not individual and department performance initiatives that drive to the overall strategic numbers.”
Kilmer emphasized that efficiency improvements CUs need to make are not the same thing as cost cutting.
“When you talk about efficiency, cost cutting is what first comes to mind,” said Kilmer. “But what we are talking about is productivity, around things like cross selling. Credit unions need to find ways to free up employees so they spend more time with members in educational ways. When that happens, that often translates into growth—like increasing loan volume and sales.”
CUs simply can’t be slow in implementing productivity improvements, emphasized Weikart, pointing to banks’ growing market share and new, low-overhead, highly efficient market entrants such as Walmart, PayPal, and Silicon Valley lenders.
“It’s time credit unions use better metrics and benchmarks, and it’s time they make sure systems can talk to each other,” said Weikart. “System integration in the not-too-distant future will be mandatory. Credit unions have to spend money integrating systems, otherwise their processes will become so inefficient that it will be hard for many to compete.”
Old Ways Of Doing Things
Kilmer suggested why many credit unions find themselves in this difficult position today—“They say we have always done things this way and they have worked. But that won’t continue,” said Kilmer noting shrinking margins and compliance costs and demands are forcing CUs to become more productive.
Kilmer added that added that senior level management may have also lost touch with the “troops,” making decisions to not spend money on integrating systems without realizing all the extra steps those decisions are causing staff to take.
“Decisions are made on a high level, yet on the ground they don’t work,” said Kilmer. “Leadership needs to go down and spend time in the trenches with people who are suffering from their decisions. And they have to have a passion for correcting things.”