Cozying Up to the

By David F. Carr  |  Posted 2002-06-17 Print this article Print

This once-struggling credit union is using software not just to pull together information on accounts, but to offer new services to customers as well.


In the mid-1990s, a sleepy IBM employees' credit union woke up to the fact that it needed to market itself more aggressively. Today, the changes are quite visible for visitors to Meriwest Credit Union's branches in River Oaks and Milpitas, Calif., where customers can sip Peet's Coffee in a cybercafé that features access to online banking services. These updated branches, with their granite countertops and slate floors, are purposefully designed to dramatize the changes in the former Pacific IBM Credit Union.

But the changes at Meriwest run deeper than interior decorating, and include a customer relationship management (CRM) architecture that connects Siebel eFinance software to multiple backend systems, as well as a personalized Web site for each member. These changes have paid off in membership growth and growth in each member's use of Meriwest services.

Originally known as the IBM San Jose Employees Federal Credit Union, Meriwest got its start in 1961, with eight employees who chipped in $4.25 each and ran the organization on a volunteer basis. Eventually, it grew into the Pacific IBM Credit Union, a professionally managed, member-owned institution with branches throughout the San Francisco Bay area, as well as Tucson, Ariz. But when IBM announced massive layoffs in 1993 and 1994, the credit union lost 20% of its members over 18 months. "It was not just because people were laid off, but they were laid off and moving away," recalls President and CEO Christopher Owen.

By 1995, the credit union was looking to make some dramatic changes, and in 1998 it reorganized itself from a federally chartered employee credit union into a state-chartered community credit union. After receiving state approval for the new charter in 1999, it changed its name to Meriwest.

Despite its not-for-profit status, Meriwest had to change if it wanted to continue to thrive, says Owen. While it does not seek to make a profit per se, the number of members it has and the amount each of them saves and borrows determines Meriwest's overall financial health and the rates and range of services it can offer. Growth is important; contraction hurts.

"It's a matter of feeding the giant. The larger you are, the more you have to eat for lunch each day," Owen says. After the IBM layoffs, the credit union had the same staff and facilities that had been built up in better times. Revenues, of course, were lower.

By 1998, Meriwest had already expanded beyond IBM to become the employee credit union for about 350 companies. But with the change to a community charter, it was free to pitch its services to more than 6 million people in the San Francisco Bay area alone—the only challenge was convincing some of them to join. At an even more basic level, Meriwest realized it needed to do a better job of marketing its services within its customer base, specifically of boosting deposit dollars per customer and loans per customer.

From its base in the heart of Silicon Valley, Meriwest couldn't help but see how technology could help it serve customers better. Offering online banking was only part of it—and accomplished relatively easily through an outsourcing deal with Corillian, a specialist in online financial services. In 1998, Meriwest also brought in a new core transaction system from Symitar Systems, a San Diego software vendor that specializes in credit union systems.

But customer service representatives still spent an inordinate amount of time switching between Symitar and other specialized applications in order to address the range of inquiries a customer might have, not only about savings and checking account balances but loans, mortgages, credit card bills and so on. Even after hustling from one system to another to obtain current information, customer service representatives would still be left with a fragmentary picture of what type of customer they were dealing with, since these transaction-oriented systems didn't make it easy to see a history of each customer's activity.

Phone representatives were also being asked to mix in outbound sales calls with their customer service duties, and as sales goals were ratcheted up they complained that the amount of time they spent navigating this maze of applications cut into their selling time.

Owen says he recognized that overcoming these issues was necessary not just to fuel growth but also just to stay competitive with other banks that were investing in customer relationship and Web technology.

David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.

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