ABC - SCMS · essentially a pricing and billing framework that helps financial institutions cut through their product silos and enable customer/member centric pricing. With the conversion

108

ABC Federal Credit Union

Strategic Initiative #3: Users of Service

Internal Analysis

In order for our credit union to remain competitive, efficient, and true to our ethos of excellent service,

it is imperative that we research, create, and implement new products and services that will better

contribute to the needs of our membership.

Over the last several years many Americans have experienced tough economic hardship and much of the faith individuals had in financial institutions rapidly deteriorated. However, throughout these unprecedented times the press continues to portray credit unions in a favorable manner. Individuals have opted to trust what the media says and seek out these institutions as a safe harbor. Deposits continue to climb, and ABC Credit Union maintains a steady deposit growth trend. In fact, over the last decade, ABC has experienced overwhelming growth. Total assets increased from $144,486,308 at year-end 2000, to $422,345,497 by month-end March 2010. That is an astounding 52% growth in overall assets for the ten-year timeframe, as evidenced by the chart below.

Along with a steady increase in total assets, our credit union has also seen a substantial growth in overall membership numbers. In 2005 ABC Credit Union’s total membership stood at 41,985. That number increased to 55,379 at month-end March 2010. That is a remarkable 32% increase in total membership. If our credit union wishes to effectively service this growing base, we must remain responsive to the ever changing needs of our credit union and its membership. We cannot sit back and be lax in our efforts. We need to research several key areas of improvement and be innovative in our thinking. These areas will help us to better service our membership, run our business more efficiently and assist in reducing long term operational costs.

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

ABC Total Assets

ABC Total Assets2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Q1 2010

109

The first key area the credit union needs to explore is to research, build and implement a centralized call center. In-person and over the telephone member transactions, questions, etc. are currently handled by an array of staff, as available. This method has worked effectively in the past; however, as our credit union continues to evidence significant growth numbers, a more effective and sophisticated telephone system becomes pertinent. A call center becomes a need, and not just a simple desire. With that said, the efficiency of a call center must be continually analyzed in an attempt to operate in a competent manner. Management should be obligated to stay attuned to the operating of the center. Call volume needs to be recognized, the determination of appropriate staffing levels must be maintained, the development of staffing schedules should be outlined and the tracking of staff performance needs to be monitored and relayed in an ongoing basis. It is pertinent that individuals are held accountable for their output.

Common Indicators Used by Call Centers in the United States – Customer Satisfaction

41985

43948

45591

51316

54827

55379

0 20000 40000 60000

2005

2006

2007

2008

2009

2010

Total Membership Numbers 2005-2010

Total Membership

Log. (Total Membership)

Customer Satisfaction

Abandoned Call Rate -

Less than 2%

Busy Rate -Less than 1%

First Call Resolution -

85%

Busy Signal if queue

exceeds target value - 3 minutes

Speed of Answer - 15

seconds

Availability -24 hours a

day 7 days a week

110

Efficiency cannot be monitored without the appropriate hardware and software, which brings us to the second key factor. Research, train and implement a new state-of-the-art telephone software and hardware system that will assist with both the call center and all other branch facilities. The overall effectiveness of a call center depends on the methods used to generate and retrieve data as well as the database and interface needs. Without new phone equipment and software, a centralized call center could not realize its full potential and would not be nearly as effective.

Common Indicators Used by Call Centers in the United States – System Responsiveness

A call center investment can typically take into consideration the potential for cross selling. Cross selling can be viewed as turning a service request into an opportunity to market additional products. This improves member service as well as transforms the call center into a revenue generating segment of the business. However, you must maintain a system that permits an effective cross selling of products. But, a system alone cannot do the trick. An appropriate amount of time for proper employee training should be allotted. Developing and maintaining quality employees is mandatory for an effective call center. Our employees are a major contributing factor to our brand. Individuals sell what they know and what they believe in. If employees truly know and believe that our institution will continue to offer great products and services, competitive wages, a great working environment, opportunities for advancement, training and much more, they will sell our institution as THE financial institution of choice. Our investment in our personnel today will pay great dividends in the future. The Pleasantville area population has been somewhat sluggish over the past 10 years, reflecting minimal growth of around 10.35%. During that same timeframe the Dallas Fort-Worth metropolitan population developed at a rapid pace of 22.1% and the Houston area grew at a rate of 21.5%. With such nominal growth evidenced throughout the regional Texas area and a confining margin of current credit union locations, the possibility of potential membership numbers beginning to plateau becomes apparent. To remove this restraint the credit union will need to become more proactive with branch development.

System Reliaiblity = 99.999%

Database Updates = At least 1 per 24 hour period

Forecasts = 12-18 months in

advance

111

The population in County A, as of 2008, stood at 117,528, and Springfield stood at 76,885. Total membership for the Springfield area was 12,567. Those membership numbers translate into 16% of the city’s population and 11% of the county’s population. Compare that to San Dimas, which maintained a population of 12,866 for the same 2008 year, and County B which evidenced a 48,887 population. Total membership for the city of San Dimas stood at 1,492, a meager 12% of the city’s population and a minute 3% of the total county population. If we wish to capitalize and grow market share, this area is a great place to start.

ABC currently maintains a small office in San Dimas, Texas. This office was acquired through a merger between County B Teachers FCU and ABC on January 1, 2009. The office location is off of the beaten path, and the facility is not only lacking in overall appeal, but efficiency. A plan to construct a 2000 - 2500 square foot facility in a prime location in the San Dimas area will bring about opportunities for advancement in this under-served region. Another manner in which both membership and the credit union can benefit is the expansion of our ATM network. Branch facilities currently exist in San Dimas, Bakersville, Wills Point and Castle Rock. However, a tremendous number of members are under banked in this area. We must research the possibility of inserting ATM’s into these geographic locations, providing an alternative to a branch office. However, research into the placement of these machines is not the only work that needs to be completed. We must also monitor the Interchange war that is still brewing. Senator Richard Durbin is sponsoring a bill that would authorize the Federal Reserve to ensure that debit card fees are “reasonable and proportional,” in relation to processing costs. It would exclude credit unions and community banks with assets of less than $10 billion. But, we can expect the networks and the merchants to apply the mandated debit interchange rate to all issuers, regardless of size, because nothing in the amendment requires the networks to operate a two-rate structure and there is no incentive for them to do so.

020000400006000080000

100000120000

117528

76885

12567

48887

128661492

Springfield vs. San Dimas

112

If this bill were to pass as-is, we could see a tremendous decrease in interchange income from non-member ATM transactions. This bill could make it almost impossible for us to service anyone but our current membership at ATM locations. While many argue that this regulation does not affect our institution, it more or less allows the Federal Reserve to set the debit interchange for big banks. This in turn would make our debit cards the most expensive for a merchant to accept, something the market will not tolerate for long. TCUL and CUNA are adamantly opposing this passage. We will continue to monitor these changes and base our expansion efforts on the bill’s outcome. The overall effects should be seen by fourth quarter, 2010. In addition, the creation and modification of existing products will be imperative, if we wish to increase member utilization. One way to do this is to develop and implement a switch kit. Switch kits consist of a minimal number of forms that can be completed and disbursed, allowing for a hassle-free process when changing accounts from one financial institution to another. It provides forms that could be used to change direct deposits, automatic payments and transfers, and to close an old bank account. While offering a Switch Kit is a step in the right direction, ABC must properly market this kit in order for it to be fully effective. According to the J.D. Power and Associates Retail Banking Satisfaction Study of 2009, 15% of customers reported a concern with their financial institution during the past 12 months. In addition, that same study found that 35% of customers say they are highly committed to their financial institution. It becomes imperative that we strike a chord with those 15%, entice them and convert them to that 35%. Guaranteeing that steps are taken to encourage individuals to make ABC Credit Union their Primary Financial Institution (PFI) is mandatory. One way to entice this group of individuals would be to offer loan promotions that coincide with the Switch Kit offering. Should a member opt to complete a Switch Kit, and move his/her checking account to our institution, a discount could be given on their loan rate. However, this would only be available should a member truly move the checking account over to our credit union. Finally, the feasibility of Database Relationship Pricing should be researched. Relationship pricing is essentially a pricing and billing framework that helps financial institutions cut through their product silos and enable customer/member centric pricing. With the conversion of our core processing system, to the new platform, in December of 2008, the limitations of pricing our offerings solely based on product usage has been eliminated. Relationship pricing will enable us to utilize customer centric parameters such as levels of overall business the member does with our credit union or the types of services he/she buys to determine pricing.

With Relationship Pricing, new product bundles and prices can be easily configured and deployed. The key hallmarks of Relationship Pricing are pricing freedom from product centric constraints and flexibility to include cross-product and customer specific parameters for pricing. It enables financial institutions to pursue innovative and new approaches to manage customer relationships and improve the profitability of their businesses. It also enables credit unions to reward members for their loyalty through specific pricing and rewards programs. Relationship Pricing is also an automation framework that enables institutions to eliminate some of their manual operations and thereby avoid revenue leakage due to human errors.

However, just like any other product, Relationship Pricing needs to be fully examined. The capabilities and functionality should be scrutinized and understood. The initiation of the product, prior to full understanding and setup, could be disastrous. Adequate time and energy must be allotted to this project in order to guarantee success.

113

The roll-out of the Relationship Pricing should bring about the ability to offer more enticing products to those “higher tiered” members. A checking account offering, that contains more competitive features such as higher interest rates, etc., should be researched. More and more financial institutions are developing a checking product that requires such things as direct deposit, 10-15 debit card transactions a month, e-statements, and more. If a member meets those stipulations, a very attractive interest rate is paid on balances up to a certain dollar amount. If we wish to stay competitive, this must be an area that we further research.

The goal is to obtain a member’s checking account. Major statistics evidence if a financial institution can capture a member’s checking account, they are more likely to become the Primary Financial Institution for those individuals. As has been chronicled by countless numbers of CUNA studies, being your members’ primary financial institution (PFI) brings with it tremendous market-penetration, market-share and, as a result, bottom-line benefits to the credit union.

As might be expected, members’ likelihood of choosing the credit union as their PFI tends to rise as asset size increases, according to CUNA’s Member Survey Benchmarking Database (see figure below). We must seize these opportunities to obtain and grow membership if we wish to continue our viability in the marketplace.

In order to make the necessary changes that will see us into the future, it is imperative that we maintain an open and innovative mind. We must train our staff to emit the mission of our institution. We should plan for elements that will be needed for an effective transition. One hundred percent buy-in is a must. It takes a multitude of strategies to reach one objective. Plan failure and financial losses are possible, if each strategy is not fully monitored and adjusted as required. However, exponential gain is all but inevitable if all are properly regulated.

38% 37%41%

48%

56%52%

0%

10%

20%

30%

40%

50%

60%

Less than $20 M $20M-$50M $50M-$100M $100M-$200M $200M-$500M $500M or more

PFI Levels by Credit Union Asset Size

Source: CUNA's Member Survey Benchmarking Database

114

ABC Credit Union

Strategic Outline 2013 - 2014 Strategic Initiative #3 – Users of Service

Objective: To increase member utilization of products and services, as well as improve overall employee efficiency and service quality to our membership.

Strategy #1: Research, build and implement a centralized call center to handle all incoming member calls.

Tactical Action Plan #1: Research and develop a call center. Tactical Action Plan #2: Purchase a build site, complete construction of the call center location and implement the facility into operation.

Strategy #2: Research, train and implement new telephone software and hardware to assist with the call center as well as all other office locations.

Tactical Action Plan #1: Research and develop new telephone software. Tactical Action Plan #2: Purchase, train and implement new telephone hardware and software.

Strategy #3: Expand the Credit Union’s presence in both San Dimas and the greater Texas area.

Tactical Action Plan #1: Purchase a build site, complete construction of a new facility and implement a new state of the art San Dimas, Texas office into operation.

Tactical Action Plan #2: Research the feasibility of additional ATM expansion in the San Dimas, Bakersville, Wills Point and Castle Rock areas.

Strategy #4: Create and modify existing products to improve member penetration and member service. Tactical Action Plan #1: Develop and implement a switch kit. Tactical Action Plan #2: Create loan promotion to market switch kits.

Strategy #5: Research and review the feasibility of Database Relationship Pricing.

Tactical Action Plan #1: Research the Database Relationship Pricing offering and how other financial institutions are utilizing the functionality.

Tactical Action Plan #2: Develop a competitive checking account that can be marketed to membership with a Platinum type relationship status.

115

Objective:

To increase member utilization of products and services, as well as improve overall employee efficiency and service quality to our

membership.

Software & Hardware

Products / Services

Ease of Usage -Branch Facility /

ATM's

116

Tactical Action Step

Strategic Initiative #3: Users of Service Objective: To increase member utilization of products and services

as well as improve overall employee efficiency and service quality to our membership.


Tactical Action Plan #1: Research and develop a call center.

Action Steps Responsible Individual

Start Date Completion Date

1. Meet with Senior

Management to discuss objectives.

Senior Management 09/2013 10/2013

2. Establish a committee of management to oversee objective.

Management / Call Center Committee

09/2013 10/2013

3. Gain preliminary approval from Board of Directors for member call center.

Senior Management / Board of Directors

09/2013 11/2013

4. Research other credit union’s success and shortcomings in regards to a call center.

Call Center Committee 10/2013 02/2014

5. Perform a rate survey for salary information.


6. Contact different vendors for pricing and contract information.


7. Obtain final budget approval and negotiate contract.


8. Contact vendors for key contacts and references.


9. Research and if possible visit a local call center outside of the financial industry to observe best practices.


10. Meet with Senior Management to present findings and finalize the action plan.

Senior Management / Call Center Committee

12/2013 12/2013

11. Present project plan to Board of Directors for final approval.


01/2014 01/2014

12. Give continual advisement to the Board of Directors of the progress of the call


01/2014 Project Completion

117

• Form the Committee

• Gain BOD Approval

Plan

• Research and/or visit Call Centers

• Rate / Hourly Survey

Research• Obtain references

and proposal

• Negotiate Contract

Implement

Resources Needed: Board of Directors, Management Staff, New Account Staff, Loan Staff Benefits: By researching other successful call centers already in operation the credit union will have the best chance of rolling out our own centralized call center with minimal difficulty. Implementation Costs: Implementation costs should remain rather low for this project. An estimated 60 hours of work is projected during the year for research. Salaries = 1st year = 60 hours (research, review and test) – avg. $20/hr = $1,200.00

Projected Expenses 2013 2014

Salary/Benefits $ 1,200 $ -

Lease Expense $ - $ -

Land and Building $ - $ -

Furniture, Fixtures, Equipment $ - $ -

Grand Opening $ - $ -

Total Expenses $ 1,200 $ -

Costs shown above represent research time spent by employees in 2013 and 2014. Factors & Assumptions: The research phase of the call center will require minimal implementation costs as shown above. It is assumed that approximately 60 hours of employee time will be used to research the completion of this initiative. Risks: As this initiative is compromised only of researching the implementation of a call center, no major risks are anticipated.

center.

118





Tactical Action Plan #2: Purchase a build site, complete construction of the call center location and implement the facility into operation.



1. Meet with Senior



09/2013 10/2013

2. Review budget for new location.


09/2013 10/2013

3. Locate land to purchase. Senior Management 09/2013 10/2013 4. Obtain Senior Management

and Board approval for budget and land purchase.


10/2013 11/2013

5. Search for builder and begin accepting bids.


6. Purchase land for new location.


7. Meet with Senior Management to discuss and accept builder bid.


12/2013 12/2013

8. Hire builder. Senior Management 12/2013 12/2013 9. Meet with builder and

agree on design plans. Begin construction of building.


12/2013 02/2014

10. Advertise for and hire call center manager.

Human Resources 12/2013 01/2014

11. Begin training call center manager.

Human Resources / Existing CU Staff

02/2014 02/2014

12. Meet to determine existing staffing levels as well as additional staffing.


13. Advertise for and hire additional call center staff.

Human Resources 02/2014 03/2014

14. Begin training new hires as well as existing CU staff converting to the call center or FSR’s.

Human Resources / Existing CU Staff

04/2014 Ongoing

15. Purchase furniture, equipment, and telephone

Senior Management / IT Department

06/2014 06/2014

119

Resources Needed: Board of Directors, Management Staff, New Account Staff, Loan Staff, IT Staff, Computerland Technicians, Training Coordinator, Human Resources, Builder Benefits: By researching other successful call centers already in operation the credit union will have the best chance of rolling out our own centralized call center with minimal issues. Implementation Costs:


Salary/Benefits $ - $ -

- Call Center Manager $ 5,157 $ 61,880

- Call Center Rep PT (2 employees) $ - $ 37,440


- Land Purchase $ 200,000 $ -

- Building Purchase $ 400,000 $ -


- Profile / Print Server $ 3,663 $ -

- Rack $ 1,200 $ -

- 48 Port Switch (PC's) $ 5,200 $ -

- 48 Port Switch (Phones) $ 5,200 $ -

- Router $ 2,250 $ -

- Workstations $ 21,924 $ -

- Combo Copier / Printer $ 4,500 $ -

- Network and Phone Drops $ 3,450 $ -

- Avocent 8-port $ 1,920 $ -

- Avocent cables $ 352 $ -

- Transfer switch $ 3,200 $ -

- H100 Controller $ 1,000 $ -

hardware and software. 16. Setup call center and install

all hardware and software. IT Department / Call Center Committee

06/2014 06/2014

17. Begin testing all equipment and software.

IT Department / Call Center Staff

06/2014 07/2014

18. Complete all testing and set implementation date.

IT Department / Call Center Committee

08/2014 08/2014

19. Meet with Senior Management to discuss any last minute issues or additional needs.


08/2014 08/2014

20. Implement call center into operation.

Management Team / Credit Union Staff

09/2014 09/2014

21. Monitor call center for member satisfaction and meet to discuss any adjustments needed.


10/2014 Ongoing

120

Successful Call

Center

Effective Ongoing Training

Efficient Management

Proper Call Routing

- Building UPS $ 24,200 $ -

- 40" TV with mounting bracket $ 2,000 $ -

- Generator $ 30,000 $ -

- Misc. Furniture, Appliances, etc. $ 75,000 $ -

Data Processing $ - $ -

- Workstation Labor (Cland) $ 1,920 $ -

- Labor and Wiring $ 10,000 $ -


Marketing $ - $ -

Postage

Total Expenses $ 802,136 $ 99,320

Factors & Assumptions: The building will be depreciated on a ten year (120 month) depreciation schedule and furniture, fixtures, appliances and equipment will be depreciated on a three year (36 month) schedule. This plan does not include the telephone software, which will be included in its own plan with its own depreciation schedule. It is assumed that after three months, call center employees will begin to cross sell other credit union products. The quoting of loan payoffs will be paramount in re-capturing auto loans. It is assumed that beginning in July of 2014, call center employees will begin cross selling loans at a rate of approximately five loans per month, with that rate increasing towards the end of that year and into 2015. Risks: Several risks involved would include the proper management of the facility, as well as proper training of the call center staff. If not trained or managed properly, the call center could cause a negative impact on member service. The setup and routing of the incoming calls will also be important to ensure the best possible service for our membership.

121

Cost Benefit Analysis:

BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -

PROJECTED INCOME: 2013 2014

Loan Income $ 4,941 $ 71,157

Investment Income $ 824 $ 11,866

Fee Income $ 938 $ 5,630

Other Income $ 76 $ 456

TOTAL PROJECTED INCOME: $ 6,780 $ 89,108

PROJECTED EXPENSES:

Allowance for Loan Loss $ 1,034 $ 6,206

Salary and Benefits $ 426,920 $ 464,646

DP Costs $ 60 $ 300

Depreciation $ 64,572 $ 86,096

Dividends $ 210 $ 3,024

Equipment Rental $ - $ -

Incentives $ 3,500 $ 9,500

Implementation $ - $ -

Marketing $ - $ -

Operation Expenses $ 1,643 $ 8,217

Postage - Statements $ - $ -

Printing $ - $ -

Professional Services $ - $ -

Maintenance $ - $ -

Lease/Rent $ - $ -

Misc Expense( Mileage) $ - $ 1,000

TOTAL PROJECTED EXPENSES: $ ($497,939) $ ($578,988)

PROJECTED NET INCOME (LOSS) $ ($491,160) $ ($489,879)

122




Strategy #2: Research, train and implement new telephone software and hardware to assist with the call center as well as all other locations.

Tactical Action Plan #1: Research and develop new telephone software.



1. Meet with Senior



2. Establish a committee of management to oversee objective.

Management / Call Center Committee

09/2013 10/2013

3. Gain approval from Board of Directors for member call center.


09/2013 11/2013

4. Research other credit union’s success and shortcomings in regards to a call center.


5. Perform a rate survey for salary information.




7. Contact vendors for key contacts and references.


8. Obtain proposal and negotiate contract.


9. Research and if possible visit a local call center outside of the financial industry to observe best practices.


10. Meet with Senior Management to present findings and finalize the action plan.


11/2014 11/2014

11. Gain final approval from Board of Directors.


12/2014 12/2014

12. Give continual advisement to the Board of Directors of the progress of the call center.


12/2014 Project Completion

123

Plan

•Form the Committee

•Gain BOD Approval

Research

•Research and/or visit Call Centers

•Contact vendors and key refernces

Implement

•Obtain references and proposal

•Negotiate Contract

Resources Needed: Board of Directors, Management Staff, New Account Staff, Loan Staff Benefits: By researching other successful call centers already in operation the credit union will have the best chance of rolling out our own centralized call center with minimal difficulty. Implementation Costs: Implementation costs should remain rather low for this project. An estimated 40 hours of work is projected during the year for research. Salaries = 1st year = 40 hours (research, review and test) – avg. $20/hr = $800.00


Salary/Benefits $ 800 $ -





Total Expenses $ 800 $ -

Costs shown above represent research time spent by employees in 2013 and 2014. Factors & Assumptions: The research phase of the call center will require minimal implementation costs as shown above. It is assumed that approximately 40 hours of employee time will be used to research the completion of this initiative. Risks: As this initiative is compromised only of researching the implementation of a call center, no major risks are anticipated.

124




Strategy #2: Research, train and implement new telephone software and hardware to assist with the call center as well as all other locations.

Tactical Action Plan #2: Purchase, train and implement new telephone hardware and software.



1. Meet with Senior



09/2013 09/2013

2. Develop budget for new telephone equipment, and software.


09/2013 10/2013



4. Contact the references provided by the vendors.


5. Obtain proposals. Call Center Committee 11/2013 12/2013 6. Meet with Senior

management and present findings and proposals


01/2014 01/2014

7. Negotiate Contract and Purchase telephone hardware and software.


8. Install all Telephone hardware and software in Main Office.

IT Department / Call Center Committee /Vendor

04/2014 05/2014

9. Begin testing telephone equipment and hardware

IT Department / Call Center Committee / Vendor

05/2014 05/2014

10. Complete Testing and Set Implementation Date and branch roll-out schedule.

IT Department / Call Center Committee

05/2014 05/2014

11. Begin Training Staff. Human Resources / Existing CU Staff

05/2014 06/2014

12. Meet with Senior Management to discuss any last minute issues or additional needs.


06/2014 06/2014

13. Implement main office into operation.

Management Team / Credit Union Staff

07/2014 07/2014

14. Monitor main office for member satisfaction and


08/2014 Ongoing

125

Successful Phone System

Proper Training

Proper Management

Proper Call Routing

Resources Needed: Board of Directors, Management Staff, IT Staff, ComputerLand Technicians, Training Coordinator, Human Resources, Vendor Benefits: Installation of the Adapt Telephone System will allow us to better meet the needs of our members through a process that assists in member benefit selection, monitors employee productivity, and assists management to see possible communication issues within the Credit Union.

Implementation Costs:





- Base Package Phone System $ 264,274.62 - Multimedia Queuing $ 16,342.00 - Interaction Recorder for (10 ) $ 11,405.00 - Interaction Screen Recorder (10) $ 12,949.00 - Post Call Surveys $ 12,099.00 - Interaction Dialer $ 14,813.00 - Real Time Core Integration $ 23,200.00 - Touch Tone Teller (IVR) $ 23,080.00 - Interaction Tracker $ 14,456.00 Grand Opening $ - $ -

Marketing $ - $ -

Postage

Total Expenses $ 392,618.52 $ -

meet to discuss any adjustments needed.

15. Begin installing telephone hardware and software at branch offices and call center location.

IT Department / Call Center Committee /Vendor

09/2014 05/2015

126

Factors & Assumptions: Any new loans brought in by this initiative have already been considered under Strategy 1.2, the installation of a centralized call center. Our assumptions for this initiative will mirror those of that strategy. All implementation costs have been depreciated over a five year period. Risks: Several risks involved would include the proper management of the software, as well as proper training on system operations. If not trained or managed properly, the system could cause a negative impact on member service. The setup and routing of the incoming calls will also be important to ensure the best possible service for our membership. Cost Benefit Analysis:

BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -


Loan Income $ - $ -

Investment Income $ - $ -

Fee Income $ - $ -

Other Income $ - $ -

TOTAL PROJECTED INCOME: $ - $ -

PROJECTED EXPENSES:

Allowance for Loan Loss $ - $ -

Salary and Benefits $ - $ -

DP Costs $ - $ -


Dividends $ - $ -


Incentives $ - $ -


Marketing $ - $ -

Operation Expenses $ - $ -


Printing $ - $ -


Maintenance $ - $ -

Lease/Rent $ - $ -

Misc Expense (Mileage) $ - $ -

Supplies $ - $ -

TOTAL PROJECTED EXPENSES: $ (78,524) $ (78,524)

PROJECTED NET INCOME (LOSS) $ (78,524) $ (78,524)

127


Strategic Initiative #3: Users of Service Objective: To increase member utilization of products and services as well

as improve overall employee efficiency and service quality to our membership.


Tactical Action Plan #1: Purchase a build site, complete construction of a new facility and implement a new state of the art San Dimas, Texas office into operation.

Action Steps Responsible Individual Start Date Completion Date

1. Appoint subcommittee to research land and facility availability and pricing.

President 02/2013 02/2013

2. Gather pricing figures. Subcommittee 02/2013 04/2013

3. Present findings. Subcommittee 04/2013 04/2013

4. Approve land purchase. President / Board of Directors

05/2013 05/2013

5. Purchase land. President 06/2013 06/2013

6. Research tentative structural planning and builders.

President 07/2013 09/2013

7. Hire builder. President 09/2013 09/2013

8. Supply builder with tentative structural planning.

President 09/2013 09/2013

9. Allow builder time to initiate plans.

Builder 09/2013 11/2013

10. Present plans for approval, making any modifications as deemed appropriate.

Builder / President 11/2013 11/2013

11. Establish groundbreaking ceremony.

Marketing 11/2013 11/2013

12. Break ground. Builder / Board of Directors

01/2014 01/2014

13. Build. Builder 01/2014 08/2014

14. Monitor building process. President 01/2014 08/2014

15. Research and discover what equipment, furniture, fixtures, appliances, etc. will be required.

President 06/2014 07/2014

128

Resources Needed: Board of Directors, Management Staff, Builder/Contractor, Human Resources, IT Staff, Training Coordinator, 2-3 additional staff, land, furniture, fixtures, equipment, appliances, time and patience. Benefits: A new branch facility in the San Dimas area will allow ABC to expand products and services to one of our underserved membership areas. This expansion will provide an increase in total membership numbers, as well as increase the total number of products per member utilized by our current base. Implementation Costs:


Salary/Benefits $ - $ 60,000


Land and Building $ 375,000 $ 50,000

Furniture, Fixtures, Equipment $ - $ 75,000

Grand Opening $ - $ 1,000

Total Expenses $ 375,000 $ 186,000

Factors & Assumptions: Pricing is kept to a minimum due to the hiring of a general contractor, versus a financial institution plan and build. Wood framing will be utilized throughout. A structure of 1800-2000 square feet is anticipated, with a 2-3 lane drive-thru. An in-the-wall ATM will be purchased. Additional room for future expansion should be expected. The additional hiring of 2-3 staff members should be anticipated, with only 1 being full-time. New hire figures and benefits are included in the numbers evidenced above. Building depreciation is set for 12 years (144 months), and equipment and furniture is set for 36 months. 150 new members are anticipated during the first 10 months of operation. Risks: Possible risks include land purchasing mishaps, construction delays or misfortunes, minimal training for new staff, bad hires or a further dip in the local economy causing charge-offs or low new membership numbers.

16. Research pricing and availability of furniture, fixtures, appliances, etc.

President 06/2014 07/2014

17. Purchase equipment, furniture, fixtures, appliances, etc.

President 07/2014 07/2014

18. Hire additional staffing. Human Resources 06/2014 06/2014

19. Train additional staffing. Training Coordinator 06/2014 09/2014

20. Complete build. Builder 08/2014 08/2014

21. Set grand opening. Marketing 08/2014 08/2014

22. Open for business. ABC 09/2014 Ongoing

129


BENEFITS

Members 0 150

Shares $ - $ 636,290

Loans $ - $ 1,326,041

Investments $ - $ (689,751)


Loan Income $ - $ 98,830

Investment Income $ - $ 16,480

Fee Income $ - $ 9,383

Other Income $ - $ 759

TOTAL PROJECTED INCOME: $ - $ 125,452

PROJECTED EXPENSES:

Allowance for Loan Loss $ - $ 10,343

Salary and Benefits $ - $ 139,000

DP Costs $ - $ 500


Dividends $ - $ 4,200


Incentives $ - $ 2,500


Marketing $ - $ 7,500

Operation Expenses $ - $ 13,694


Printing $ - $ -


Maintenance $ - $ -

Lease/Rent $ - $ -

Misc Expense( Mileage) $ - $ 1,000


PROJECTED NET INCOME (LOSS) $ (39,931) $ (93,216)

130





Tactical Action Plan #2: Research the feasibility of additional ATM expansion in the San Dimas, Bakersville, Wills Point and Castle Rock areas.

Resources Needed: Staffing, budget approval, ATM’s, ATM sites, and time to monitor both legislation and machine utilization. Benefits: Providing additional services to our membership at more locations and more convenient hours.


1. Obtain pricing for the Triton RL2000 machines.

VP if Information Systems

02/2013 02/2013

2. Monitor legislation, in an ongoing attempt to verify the necessity of such machines.

President / Users of Services Committee

02/2013 Ongoing

3. Research the need for placement of such machines in our underserved areas.

Users of Services Committee / Branch Managers

02/2013 04/2013

4. Map out placement of machines and total numbers required for purchase.

Users of Services Committee

04/2013 05/2013

5. Develop schedule of machine purchase and implementation.

VP of Information Systems

05/2013 05/2013

6. Obtain final budget approval for the purchase of new machines.

President 05/2013 05/2013

7. Purchase machines, as required.


06/2013 Ongoing

8. Monitor usage and guarantee placement.


06/2013 Ongoing

131

Implementation Costs:

IMPLEMENTATION COSTS:




Furniture, Fixtures, Equipment $ 29,812 $ 37,265


Marketing $ - $ -

Postage $ - $ -

Miscellaneous Expenses $ - $ -

Total Expenses $ 29,812 $ 37,265

Factors & Assumptions: Implementation costs would be kept simply to the pricing of the machines. Four machines would be purchased in year 2013 at a cost of $6,125.00 for the machine and $1,328.00 for a four year maintenance plan for each machine. Five machines would be purchased in year 2014, again at a cost of $6,125.00 per machine and $1,328.00 for a four year maintenance plan for each. Machines will be setup on a 4 year depreciation schedule and the maintenance will be expensed at the time of purchase. A $250.00 per month income, per machine, can be anticipated during the first two years of enactment. This $250.00 will be minus the contracted benefit paid to the business where the machine resides. Existing staffing would be utilized, so additional salary expense was not calculated in this plan. Risks: Legislative changes would be a tremendous setback. Monitoring must be ongoing and the purchasing of machines needs to be based on anticipated outcomes. In addition, the placement of a machine in a low traffic area could be harmful. Research is essential and usage tracking is imperative to guarantee usage. Cost Benefit Analysis:

BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -


Loan Income $ - $ -


Fee Income $ - $ -

Other Income $ 5,750 $ 19,500


132

PROJECTED EXPENSES:



DP Costs $ - $ -


Dividends $ - $ -


Incentives $ - $ -


Marketing $ - $ -



Printing $ - $ -


Maintenance $ 5,312 $ 6,640

Lease/Rent $ - $ -

Misc Expense( Mileage) $ - $ -

Supplies $ 1,000 $ 3,000


PROJECTED NET INCOME (LOSS) $ (3,497) $ (93)

133




Strategy #4: Create and modify existing products to improve member penetration and member service.

Tactical Action Plan #1: Develop and implement a switch kit.


1. Appoint Sub-Committee to research Switch Kit offerings.

Manager of Product Development & Implementation

06/2013 06/2013

2. Research multiple Switch Kit offerings.

Users of Service Sub-Committee

06/2013 08/2013

3. Decide which offerings should be incorporated into a Credit Union offered kit.


09/2013 10/2013

4. Present findings to full committee for review.


10/2013 10/2013

5. Decide which offering will be available in a Credit Union offered switch kit.

Users of Service Committee

10/2013 11/2013

6. Develop prototype for Switch Kit offering.


11/2013 12/2013

7. Present prototype for review and approval.

Users of Service Sub-Committee / President

12/2013 12/2013

8. Research Switch Kit delivery channel options.

Users of Service Sub-Committee / Marketing

12/2013 01/2014

9. Finalize which delivery channels will be utilized for the Switch Kit offering.


01/2014 02/2014

10. Obtain approval for Switch Kit delivery channels.


02/2014 02/2014

11. Develop delivery channels.


03/2014 04/2014

12. Train all front-line staff that will be associated with the beta testing of the Switch Kit offering.


03/2014 04/2014

13. Implement kit offerings through proper delivery channels for efficient beta testing.

Users of Service Sub-Committee / FSR’s

04/2014 05/2014

134

Resources Needed: Resources required included: existing credit union staff, Switch Kit offerings and documentation, tracking capabilities, delivery channel offerings, Presidential approval and much time and energy to guarantee a fully functional, easy and appropriate product is established. Benefits: A simplistic manner in which a member, along with the credit union’s assistance, can fully move a checking account held at another financial institution to our institution. Implementation Costs:



Software Cost (hosted version) $ 2,950 $ -



Marketing (in house material) $ - $ 100

Maintenance $ - $ 600

Total Expenses $ 2,950 $ 700

Factors & Assumptions: By implementing this simple kit offering, an individual will find it much easier to move a checking account to our institution. A 2% (23 accounts) increase in opened net checking accounts is anticipated the first year of enactment, with a 5% (115 accounts) increase in net accounts opened thereafter. This plan should not be perceived as a huge money maker for the credit union. However, the plan does increase the number of services utilized by a member and increases the likelihood of that individual utilizing the credit union for future services.

14. Track utilization during testing phase.


05/2014 07/2014

15. Compile findings based on testing.


07/2014 07/2014

16. Present findings of beta testing for review.


07/2014 07/2014

17. Modify delivery channels and Switch Kit offerings as deemed appropriate, based on beta testing findings.


08/2014 08/2014

18. Seek final go-live approval.


08/2014 08/2014

19. Inform front line staff any changes made during beta testing.


08/2014 09/2014

20. Go live with the kit offerings.


10/2014 10/2014

21. Monitor usage and make changes are deemed necessary.

Users of Service Committee / Marketing

10/2014 Ongoing

135

Risks: With an increase in new account openings, comes the increase in overall loss incurred by the credit union. Charge-off numbers could increase and the credit union must be prepared for such losses. However, an increase in generated fee income should also be evidenced.

BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -


Loan Income $ 15,154 $ 109,108

Investment Income $ 2,527 $ 18,194

Fee Income $ 1,439 $ 8,632

Other Income $ 116 $ 699


PROJECTED EXPENSES:

Allowance for Loan Loss $ 1,586 $ 9,516


DP Costs $ 92 $ 460

Depreciation $ - $ -

Dividends $ 644 $ 4,636


Incentives $ - $ -


Marketing $ - $ -

Operation Expenses $ 2,520 $ 12,599


Printing $ - $ -


Maintenance $ - $ -

Lease/Rent $ - $ -


TOTAL PROJECTED EXPENSES: $ ($4,842) $ ($27,211)

PROJECTED NET INCOME (LOSS) $ $14,394 $ 109,422

136




Strategy #4: Create and modify existing products to improve member penetration and member service.

Tactical Action Plan #2: Create loan promotion to market switch kit.


1. Appoint Sub-Committee to research options for creation of loan promotion to market Switch Kits.


07/2013 07/2013

2. Research qualifications for rate reductions for use of Switch Kit.


07/2013 08/2013

3. Present findings to full committee for review.


08/2013 08/2013

4. Decide which offering will be available in a Credit Union offered loan promotion switch kit.

Users of Service Committee

09/2013 09/2013

5. Develop prototype for the loan promotion Switch Kit offering.


09/2013 10/2013

6. Present prototype for review and approval.


10/2013 10/2013

7. Research delivery channel options for loan promotion.


10/2013 11/2013

8. Finalize which delivery channels will be utilized for the loan promotion Switch Kit offering.


12/2013 12/2013

9. Obtain approval for loan promotion Switch Kit delivery channels.


01/2014 01/2014

10. Develop delivery channels.


01/2014 02/2014

11. Train all front-line staff that will be associated with loan promotion in conjunction with the Switch Kit offering


02/2014 03/2014

12. Implement loan promotion with kit offerings through proper

Users of Service Sub-Committee / FSR’s

03/2014 04/2014

137

Resources Needed: Resources required included: existing credit union staff, Switch Kit offerings and documentation, tracking capabilities, delivery channel offerings, Presidential approval and much time and energy to guarantee a fully functional, easy and appropriate product is established. Benefits: A tool used to create cross-sell opportunities to refinance loans from other financial institutions, creating savings to members and income for the credit union. Implementation Costs:






Marketing $ - $ -

Maintenance $ - $ -

Total Expenses $ - $ -

Factors & Assumptions: By implementing this loan promotion, an individual will find it easier to move existing loans to our institution. Due to this product being an internal promotion held in house, a minimal amount of loans are anticipated. This offering allows for another avenue for possible loan recaptures.

delivery channels.

13. Track utilization during testing phase.


04/2014 05/2014

14. Review tracking findings. Users of Service Sub-Committee / Marketing

05/2014 05/2014

15. Present findings for review.

Users of Service Sub-Committee / Marketing / CEO

05/2014 05/2014

16. Modify loan promotion or delivery channels as deemed necessary.


05/2014 06/2014

17. Inform front line staff any changes made to delivery channels or loan promotion in conjunction with switch kit.


06/2014 06/2014

18. Continue to promote loan promotion with Switch kit.


07/2014 Ongoing

19. Monitor usage and make changes are deemed necessary.

Users of Service Committee / Marketing

07/2014 Ongoing

138

This plan should produce increased interest income for the credit union and will increase the number of services utilized by a member and raises the likelihood of that individual utilizing the credit union for future services. Risks: With an increase in new account openings, comes the increase in overall loss incurred by the credit union. Charge-off numbers could increase and the credit union must be prepared for such losses. However, an increase in generated fee income should also be evidenced.

139





Tactical Action Plan #1: Research the Database Relationship Pricing offering and how other financial institutions are utilizing the functionality.


1. Appoint sub-committee to analyze the Relationship Pricing intelligence.

President 05/2014 05/2014

2. Research core system’s offering for Database Relationship Pricing through eDocs.

AVP of Project Implementation and Development

05/2014 06/2014

3. Contact core system vendor and request a list of credit unions currently utilizing the Relationship Pricing offering.


06/2014 07/2014

4. Locate 2-3 credit unions, currently utilizing the software intelligence, and schedule site visitations.


07/2014 07/2014

5. Visit site locations. Sub-committee 07/2014 08/2014

6. Compile findings and specify specific offerings our credit union would like to incorporate into the pricing module.

AVP of Project Implementation and Development / Sub-Committee

08/2014 09/2014

7. Present findings for review.

Sub-Committee 09/2014 09/2014

8. Make modifications to findings as deemed appropriate.

Sub-Committee 10/2014 10/2014

9. Contact Trust Data for programming options on grading current membership base.

AVP of Project Implementation

11/2014 11/2014

10. Setup parameters in test environment to guarantee proper workings.

AVP of Product Development and Implementation

12/2014 02/2015

140

Resources Needed: A minimal amount of staff will be required to research and review the offering. In addition to staffing, a small monetary budget will be required. This budget will allow for the review of credit unions currently utilizing the software through on-site visitations. One to two visitations should be anticipated. Benefits: Database Relationship Pricing will bring about the ability to configure new product and bundling pricing based on member centric parameters that evidence the level of overall business a member does with our credit union or the types of services he/she buys. The automated pricing system will also bring about an end to manual pricing calculations; therefore avoiding revenue leakage due to human error.

11. Contact Trust Data for possible programming modifications.


02/2015 04/2015

12. Test programming modifications, prior to implementation.


04/2015 06/2015

13. Set implementation date. President 06/2015 06/2015

14. Load updated program into live file.


06/2015 06/2015

15. Run scoring on entire membership base.


06/2015 06/2015

16. Set timeframe for membership re-pricing.

AVP of Product Development and Implementation / President

06/2015 Ongoing

17. Periodically, re-price member database.

AVP of Product Development

12/2015 Ongoing

141

Implementation Costs: Implementation costs should remain rather low for this project. An estimated 120 hours of work is projected during the first year of setup. Only twelve hours are projected, per year, thereafter. Meals and fuel costs will be included in the first year of expenditures, as site visitations are conducted. In addition, special programming will be required to price our existing membership base. This program will also be utilized moving forward, as we re-price accounts on a periodic basis. Salaries = 1st year = 120 hours (research, review and test) – avg. $20/hr = $2400.00

2nd year = 12 hours per year (re-pricing membership) – avg. $21/hr (5% increase) = $252.00


Salary/Benefits $ - $ 2,400


Furniture, Fixtures, Equipment $ - $ 1,500


Marketing $ - $ 250

Maintenance $ - $ -

Total Expenses $ - $ 4,150

Factors & Assumptions: Implementing a relationship pricing centric will allow our credit union to pursue innovative and new approaches to managing member relationships and improve the profitability of our institution. It will enable our credit union to reward our membership for their loyalty through specific pricing and rewards programs. Risks: Possible risks include the utilization of the pricing prior to complete understanding and training. If this were to occur, the entire project could be jeopardized and monies spent would be at waste. A premature rollout could be disastrous.

142


BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -


Loan Income $ - $ -


Fee Income $ - $ -

Other Income $ - $ -

TOTAL PROJECTED INCOME: $ - $ -

PROJECTED EXPENSES:


Salary and Benefits $ - $ 2,400

DP Costs $ - $ -


Dividends $ - $ -


Incentives $ - $ -


Marketing $ - $ -



Printing $ - $ -


Maintenance $ - $ -

Lease/Rent $ - $ -

Misc Expense( Mileage / Travel) $ - $ 250

Supplies / Programming $ - $ 1,500

TOTAL PROJECTED EXPENSES: $ - $ (4,150)

PROJECTED NET INCOME (LOSS) $ - $ (4,150)


143




Tactical Action Plan #2: Develop a competitive checking account that can be marketed to membership with a Platinum type relationship status.


1. Appointment Sub-Committee to review and research feasibility of database relationship pricing and options for development of a competitive checking account.


07/2014

07/2014

2. Research enticing offers or products and cost associated with relationship pricing that would create an appealing new draft account.

Users of Services Sub- Committee

07/2014

08/2014

3. Present findings to full committee for review and determine if offers researched contain the tools necessary to attract Platinum status members.

Users of Services Sub-Committee

09/2014 09/2014

4. Make modifications to offerings as deemed necessary


09/2014 10/2014

5. Present concept for approval to CEO.

CEO, Users of Services Sub-Committee

10/2014 10/2014

6. Finalize Platinum checking product offering and data base relationship pricing.


10/2014 10/2014

7. Modify marketing material and web-site to promote new draft account.

Marketing 10/2014 11/2014

144

Resources Needed: Existing credit union staff, marketing materials, technical assistance from Core Programming as well as internal IT department in setting up relationship pricing parameters, tracking capabilities, delivery channel offerings, Presidential and Board approval Benefits: This presents an additional avenue to encourage our members to utilize multiple products and services based on relationship pricing and using the Credit Union as their primary financial institution Implementation Costs:







Maintenance $ - $ -

Total Expenses $ - $ 1,745

Factors & Assumptions: By offering relationship pricing, our members benefit by reduced fees, rates and other special considerations which promotes increased usage of other Credit Union products and services. Our initial plan is to target market current members that do not have a checking relationship with our credit union but meet some of the database relationship pricing criteria. We plan to do a separate

8. Train all front line staff on use of data base relationship pricing associated with new draft offering

Users of Services Sub-Committee/Branch Mangers/FSR’s

10/2014 12/2014

9. Implement platinum checking product offerings

User of Services Sub-Committee/FSR’s

01/2015 01/2015

10. Track utilization User of Services sub-Committee/Marketing

02/2015 Ongoing

11. Compile findings User of Services sub-Committee/Marketing

02/2015 Ongoing

12. Present findings for review

User of Services Sub-Committee/Marketing

02/2015 Ongoing

13. Monitor usage and make changes as deemed necessary

User of Services Sub-Committee/Marketing

Ongoing Ongoing

145

postcard mailer to a group of about 1500 members. From this initial mailer, we want to get definitive tracking results of the effectiveness of this marketing material. An increase of 50 Platinum checking accounts is anticipated from this initial marketing mailer. A cost benefit including the mail-out only is included below. Risks: With an increase in new account openings, comes the increase in overall loss incurred by the credit union. Charge-off numbers could increase and the credit union must be prepared for such losses. However, an increase in generated fee income should also be evidenced.

146


BENEFITS

Members 0 0

Shares $ - $ -

Loans $ - $ -

Investments $ - $ -


Loan Income $ - $ 47,438

Investment Income $ - $ 7,910

Fee Income $ - $ 3,753

Other Income $ - $ 304

TOTAL PROJECTED INCOME: $ - $ 59,406

PROJECTED EXPENSES:

Allowance for Loan Loss $ - $ 4,137


DP Costs $ - $ 200


Dividends $ - $ 2,016


Incentives $ - $ -



Operation Expenses $ - $ 5,478

Postage - Statements $ - $ 630

Printing $ - $ -


Maintenance $ - $ -

Lease/Rent $ - $ -


TOTAL PROJECTED EXPENSES: $ - $ (13,576)

PROJECTED NET INCOME (LOSS) $ - $ 45,830

Documents

ABC - SCMS · essentially a pricing and billing framework that helps financial institutions cut through their product silos and enable customer/member centric pricing. With the conversion