Cutting Costs Through Eliminating Third-Party Vendor Use
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Through the use of a direct vendor, which offers a comprehensive and integrated suite of electronic document management products, Kinecta Federal Credit Union, headquartered in Manhattan Beach, Calif., has succeeded in reducing expenditures for third party intervention by over $200,000 per year.
Problem
Kinecta Federal Credit Union, formerly Hughes Aircraft Employees Federal Credit Union and one of the largest credit unions in the United States, serves over 230,000 members through 22 member service centers. With assets over $2 billion, Kinecta Federal Credit Union undoubtedly was using its fair share of paper-related products.
In the paper-intensive credit union industry, effective document management is a pivotal aspect of business. As the Kinecta Federal Credit Union member base continued to grow, with assets increasing from over $2.1 billion in 2000 to over $2.4 billion in 2001, the organization needed to explore new ways to handle the paper associated with its daily procedures. These procedures included file storage, records retention and the processing of loan documents.
The initial electronic document management system (EDMS) was implemented in 1990. Five years later the software was obsolete, compared to newer technologies, and required replacement. In this new system, Kinecta Federal Credit Union desired a product that could efficiently and effectively manage its daily paper intensive processes, while increasing member services.
The second time around, Kinecta Federal Credit Union chose second-generation document automation, which could only be administered by the vendor's Value Added Reseller (VAR). However, the local VAR proved to be expensive, slow and unable to meet the credit union's needs. The VAR also provided Kinecta Federal Credit Union with technical support as well. This unfavorable relationship caused a gap between Kinecta Federal Credit Union and the software manufacturer, which perpetuated delays in addressing critical issues and challenges. Furthermore, customizations to the software had to be directed through the VAR.
In 1999, Kinecta Federal Credit Union needed to upgrade from a 16-bit to 32-bit information system platform. This upgrade permitted the opportunity to investigate other technologies to fit into the credit union's long-term goals. Phil Nielsen, Manager of Document & Workflow Management, sent out a Request For Proposal (RFP) to various EDMS vendors. The bid responses were then reviewed and system requirements were finalized. Kinecta Federal Credit Union narrowed the field of vendors to exclusively include those that reflected the specific criteria that most readily meet their needs. Required components of the desired system included a direct relationship with the software manufacturer and the ability to manage specific processes related to the credit union industry, such as the retention of member records, COLD reports and cleared check requests. This included the effective management of checks, capture of member statements and flexibility to allow all branches of the credit union access to vital member information, such as check images, loan applications and member statements. The selected vendors were asked to submit more information and provide product demonstrations.
"We told them about the custom pieces we needed, and we gave them our 'wish list,'" Nielsen recalls. "We wanted an integrated system. And, there had to be a provision for importing our third party cleared checks and barcode indexing for scanning."
Solution and Implementation
After carefully balancing their requirements against the products, Kinecta Federal Credit Union chose the DocFinity® Suite of Products, developed and distributed by Optical Image Technology, Inc. (OIT), located in State College, Pennsylvania. The partnership between the two organizations began on August 1, 2000. As part of the transaction, Kinecta purchased the following products to respond to its business needs: DocFinity COLD-ERM, DocFinity Workflow, DocFinity Imaging, DocFinity AutoARCHIVE, DocFinity IntraVIEWER®, DocFinity Print/Fax Server and DocFinity Hierarchical Storage Manager (HSM).
"OIT had everything we needed, including the capability for all our members to connect over the Internet," says Nielsen.
This use of the Internet would allow Kinecta Federal Credit Union to enhance member service through the development of a home banking channel. Members could access their banking information twenty-four hours a day, seven days week, in the comfort of their own homes without consideration to time.
The ability for members to retrieve information via the Internet benefits both parties. Instead of members having to call a branch office to speak to a Kinecta Federal Credit Union representative, they can log online to their account and access the appropriate information, including balance statements and check images. This saves the member time through not having to wait for a representative to pull and transmit the information. From a business standpoint, the Kinecta Federal Credit Union employees reduce the time spent searching for images, and preparing them for print and transfer. The time saved can be utilized in more productive means.
Kinecta Federal Credit Union began the process by implementing the COLD-ERM module in August of 2000, which is designed to help organizations eliminate report printing through electronic archiving, indexing, storing and retrieval of data. Following installation, the credit union continued the implementation process by executing the integration of DocFinity Imaging and DocFinity Importer into their established infrastructure. These products help organizations scan and import documents to be indexed, and automate business processes, respectively.
Installation presented some challenges, particularly regarding an underestimation of hardware capabilities by OIT of system volumes. At the same time, Kinecta Federal Credit Union had difficulty in extracting data from the existing propriety system. However, OIT worked with Kinecta Federal Credit Union to address, and solve, all issues. To prevent similar issues in the future, Scott Buchart, President and CEO of OIT, immediately assigned an OIT Account Manager as a liaison to facilitate and expedite communication. Through open communication, the two organizations were able to effectively manage and address subsequent concerns. This is an important aspect of the two organizations' partnership, as it was lacking in Kinecta Federal Credit Union's previous interactions with a third-party vendor.
Process Changes
The new solution allows Kinecta Federal Credit Union to receive daily CDs containing the prior day's cleared checks from a third party vendor. As the checks are cleared, the third party vendor creates an image of each check to be stored on the daily CD, along with its index information. Each CD contains approximately 45,000 checks processed per day. The images and indexing information are imported from the CD into the DocFinity Suite at the credit union. The imported cleared checks are joined in the DocFinity Suite by more than 3,000 hard copy documents the credit union scans per day, including loan and membership applications. The DocFinity Suite also processes 500 daily reports off Kinecta Federal Credit Union's mainframe system, which consumes 350 mg of digital storage each day.
Kinecta Federal Credit Union maintains a 550 installed user base throughout its 20 departments at its main facility, and 22 remote Member Service Centers (MSC). Furthermore, almost 300 users access member information in the DocFinity Suite through OIT's web client, demonstrating the flexibility in the product. The advantage of this functionality lies in the software's ability to grow with the needs of the organizations using it. With the OIT EDMS solution in place, all users, regardless of physical location, are able to retrieve and view COLD reports, scanned and imported documents, and cleared check copies via the DocFinity IntraVIEWER web client.
The OIT solution allows Kinecta Federal Credit Union to fill member requests for a single cleared check copy within minutes, compared to the days or weeks it took under the previous solution. This has considerably reduced the time needed for Kinecta Federal Credit Union to provide exceptional customer service to its members. Access through a web client has made tasks, such as the retrieval of vital member documents, easier for employees, and has increased overall productivity and morale, measured through in-house surveys and questionnaires. The system architecture has decreased the overhead on administrative responsibilities and allowed for increased document and data security. The DocFinity Suite has also provided significant economies for decreasing paper retention and leased office space, measured by in-house surveys.
Return On Investment
"The return on investment is clear," says Nielsen. "For example, we have seen an increase in staff productivity and improved member service. Using the Internet via OIT's DocFinity IntraVIEWER module, we don't have to touch the PC to do upgrades - a tremendous saving over our old system."
This benefits Kinecta Federal Credit Union through not having to complete upgrades on hundreds of machines, in multiple locations. Upgrades are installed on a web server and are completed instantaneously, which saves the credit union time and money. This process, which could potentially take days to complete, can be done in minutes.
Kinecta Federal Credit Union has also recognized sizeable savings regarding paper report production and distribution. Previously, the credit union would invest upwards of $1,000 to generate one report over several hours to days. With the DocFinity Suite in place, the process costs pennies per report, has eliminated the need for third party interaction, and can be completed in less than 15 minutes.
Additional ROI can be seen through the check clearing process. Prior to the installation of DocFinity, Kinecta Federal Credit Union would run four machines for eight hours a day to import 45,000 checks into their system. Through implementation of OIT's importer product, the entire check inputting process can be completed in three to four hours with the use of a single server. This change also provided significant timesavings for members of the credit union. Previously, it would take three days or longer to process checks and make them available to customers. With the OIT system, members can view processed checks in less than twenty-four hours via the Internet.
In December 2002, Kinecta Federal Credit Union's management was so impressed with the savings they were achieving through the DocFinity Suite that they made the decision that all reports will be processed using OIT. This resulted in further substantial reduction, measured by in-house surveys and evaluation of expenditures, in the costs associated with printing, including resources required to store paper documents. Prior to this mandate, reports were printed to the mailroom and distributed to the appropriate personal. The process wasted time and required significant reprinting of documents that were misplaced or lost. Through the implementation of the DocFinity Suite, this delivery process has been eliminated and the timesavings have been reallocated to other areas of operation.
Perhaps the most noteworthy savings, amounting to over $200,000 a year, were realized because Kinecta Federal Credit Union no longer needed the former imaging VAR for custom programming.
The Future
Kinecta Federal Credit Union is continuing the implementation roll out of the DocFinity Suite through zoning in on its business processes. Management is currently evaluating processes of which to apply workflow. Through the use of DocFinity Workflow, the credit union is automating procedures to achieve long-term return on investments and reduce the time required to serve members.
Benefit
Kinecta Federal Credit Union is saving money on its daily business practices, including printing and storage costs. It is also serving its customers in a more efficient manner through information at a user's fingertips and decreasing the time required to process tasks.
*The above report includes information which previously appeared in the white paper, "Increasing Efficiency and Member Satisfaction with EDMS - Kinecta Federal Credit Union's Success Story," by Gordon E.J. Hoke, eVisory Consulting, www.evisoryconsulting.com.
