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As one of the largest credit unions in the Unites States, Raleigh, North Carolina-based Coastal Federal Credit Union’s primary focus is on offering the products and services that its 127,000 members need, and improving delivery channels to support its rapid growth. This $1.3 billion credit union was established in 1967 by eight IBM employees. In the early 1990s, Coastal expanded its field of membership to include other businesses in the Charlotte and Raleigh North Carolina area. Today it serves members worldwide from 1,000-plus companies and 20 associations through an integrated network of 16 branches, 45 ATMs, a call center and audio and online banking, and is now the second largest credit union in North Carolina.
As Coastal adds products and services and improves its delivery channels to support its 10 to 15 percent annual member growth rate, the common component is its ability to expand and easily integrate new technology with its core processing solution. Successful integration is critical to maintain member service and a healthy return on technology investments. Coastal required a solution that could meet the demands of the future and provide both the flexibility to support planned new products and services and the scalability to sustain aggressive growth.
Coastal has worked with its main technology partner, IntegraSys, since 1977. In 2001, the two organizations teamed to select a solution that would position Coastal to exceed its growth goals. In mid 2002, Coastal converted to CUBE, IntegraSys’ in-house core processing platform. CUBE is built around Microsoft® technology and an open database connectivity (ODBC) compliant database, which is today’s open database standard.
With IntegraSys’ CUBE platform at the center of its technology infrastructure, Coastal has been able to easily and cost-effectively further its growth goals by improving delivery channel options and adding the new products and services that its members need. In 2003, Coastal opened four new branches with remote teller systems, reducing labor costs and increasing security. Tellers interact with members from a back room so branch visitors don’t see a typical teller line or window that may be easier to rob. The remote teller system integrated easily with CUBE without any modifications to either system. Also, signatures, receipts and cash disbursements are all processed without manual handling by tellers.
CUBE easily allows a single teller to efficiently work two remote teller windows by toggling between two member sessions on the CUBE system. Remote tellers also use CUBE’s electronic signature feature, which allows members to complete transactions needing signatures without interacting directly with tellers. Each Coastal branch is staffed at lower capacity than needed for typical teller windows. Based on the smooth implementation, the Coastal team plans to open eight additional branches in 2004, most with remote teller systems, and to retrofit some of their existing branches with remote tellers over the next few years. They are also considering adding capabilities to accept and dispense checks via remote tellers.
Coastal recently added its first courtesy pay program. Called Bounce Guard, Coastal’s developers designed, developed and tested the courtesy pay software in about 45 days. Developers independently interfaced their internally built software with CUBE and were able to begin using it within two weeks while relying on the IntegraSys team as a resource to answer a few questions via phone. Every member initially has access to the service, which has proven to be a significant revenue source and is meeting Coastal’s expectations.
CUBE also was a key enabler that helped Coastal launch its commercial real estate/business lending program in the fourth quarter of 2003. By tapping into its existing residential mortgage interface between its third party provider’s product and CUBE, Coastal was able to easily add the same interface for business lending. Easy integration with CUBE allowed Coastal’s new business lending program to be up and running in about 45 days. Today, the complexities of commercial loans require that they originate using a paper-based process, but Coastal is looking at Web-based alternatives. Since launching business lending less than five months ago, Coastal already supports approximately $100 million in business loans.
According to Coastal’s senior vice president and strategic business officer, Chuck Purvis, no system is perfect. “There are always trade offs between automating versus continuing a manual process, but CUBE has enabled us to take on new things and has never been a barrier.”
Since converting to CUBE, Coastal has easily added four new branches, efficient and safe remote teller systems in each of these branches, a courtesy pay program as a successful revenue generator, and a booming business lending program. Each of these additions is very popular among members. Each also requires the flexibility that CUBE’s open architecture and its Microsoft-based technology allows for easy integration with custom or third party software and supporting infrastructure.
“Over the last 18 months, we have always been able to work within the system’s capabilities with no or only small adjustments,” Purvis continued.
While Coastal is investing heavily in new branches, ATMs and technology, the growth enabled by this technology has been sufficient to fund those investments and allow it to maintain a 115 to 120 basis points return on assets, compared with 100 basis points credit unions typically earn each year.