First National Bank-Southwest (FNB) in Frisco, Texas was feeling the heat of competition. In the past 10 years, Frisco has exploded from a sleepy little farming community to a vibrant upscale suburban city of over 40,000 on the northern edge of the Dallas metropolitan area. This growth has made it fertile ground for large interstate institutions.
A member of the First National-Omaha group but chartered in the 1930’s, FNB-Southwest knew that, in order to remain competitive, it needed to offer refined services like the big boys — services all banking customers expect. But just as important, it couldn’t compromise its reputation for high-end customer service.
Community banks and credit unions find themselves scrambling to remain competitive with their larger banking brethren, who threaten their market share. A robust alternative, these smaller groups position themselves as service-oriented institutions that take pride in personal relationships with customers.
Outsourcing Helps Small Banks Remain Competitive
“Our core IT system is in Omaha,” says Kerry Hall, operations manager in Frisco. “We have to process transactions to reflect activity for that same day. To remain competitive, our customers need to know they’ll get credit the same day. And when necessary, our people need to share this real-time information with our customers.”
A vital link in this process is transaction imaging.
Hall said it was not logistically feasible to get the bank’s work to Nebraska and still have reasonable cutoff times. “Customers lose money if we can’t provide a timely mechanism for processing transactions. We needed an outsourcing provider for our proof item processing since it’s not cost-effective to do it in-house,” she explains.
This led FNB-Southwest to Plano, Texas-based Aurum Technology, a three-year old spin-off of Electronic Data Systems (EDS). In that short time, Aurum has fast become a banking technology and back-office support outsourcer, serving a specific niche: established community banks and credit unions. Aurum currently provides services to over 650 small and mid-sized banking institutions throughout the U.S.
Aurum provides attractive features that parallel those of the larger competition. Offerings run the gamut of full core IT databases, transaction processing and Internet banking, to name a few, that are scaled for the smaller operations. Its customers use these features in whole or in part, depending on their needs.
“Our only business is providing products and services to the community banking marketplace,” says Mike Hill, president of Aurum’s Bank Management Information System Division. “Our objective is to help them be premier banking institutions at an affordable price. That includes offering as little or as much of our services as they need.”
One of Aurum’s services, Image Depot and its CRM support tools, were just what FNB-Southwest needed. It offers immediate visual records of any transaction — a big advantage since the bank doesn’t have to wait several days to get those image records from the bank’s core system in Omaha.
From a financial perspective, many smaller banking groups can just as easily maintain core IT services in-house as outsource. Deciding to outsource becomes a question of culture and logistics, according to Art Gillis, an independent bank technology expert who tracks trends in the industry and principal of Computer Based Solutions, Inc. in Dallas, Texas. “Some don’t have the infrastructure onsite in a manner that allows them to be responsive to the customer. For others, it’s just not practical,” he says. Gillis reports about 45 percent of community banks outsource some or all of their IT services.
Aurum’s emphasis on customer service is its distinguishing characteristic in the marketplace, Gillis continues. He says the service provider’s ideal customer is the financial institution known for its high-end customer service. “Everyone offers basically the same technology. What Aurum has done is focus on a service-oriented niche, including superior customer support. Then, it delivers,” he observes. Gillis attributes Aurum’s service-related culture to its EDS heritage.
“The community bank niche and its emphasis on service is a very good match for us,” says Bill Miller, senior vice president of Aurum. “Personally serving customer needs is our culture, just as it’s the culture of our client banks.”
For example, FNB-Southwest just added voice mail to its phone system. “It’s not because we didn’t have the capacity,” explains Hall. “We want our customers to know there are people here to help them, not some system they must negotiate. When they call us, they know they’ll speak with a person.”
Helping Customers Keep Their Customers Happy
The service provider has client relationship managers near its banking customers. Hall says the parallels in culture between Aurum and her institution make it easier to keep FNB-Southwest’s customers happy.
“Their flexibility reflects our customer-oriented mission. And when there’s an occasional problem, the additional support they provide is a further reflection of our ‘can-do’ attitude,” she says. “When it comes to their money, customers aren’t concerned with how our support systems work or why. They just want immediate resolution to their question. Aurum’s service to us is a logical extension of our own.”
Lessons from the Outsourcing Journal
- Service-oriented firms can remain competitive in the marketplace by outsourcing to a service provider that shares the same service “mission.” Aurum focuses on banks that pride themselves on superior customer service.
- Outsourcing relationships flourish when a service provider’s culture matches the buyer’s. Often, the service offerings match up better.
- Service providers can grow their market share when they zero in on a niche. Aurum has done well focusing on small to mid-sized financial institutions.
- Service providers do well when they help smaller buyers level the playing field in today’s competitive economy.