Teachers Federal Credit Union is using robotic process automation to improve operational efficiency and eliminate manual tasks — and fuel its nationwide expansion.
Large banks have seen significant benefits from adopting RPA, a technology which enables businesses to deploy software to perform mundane tasks previously done by staff. It’s challenging for smaller financial institutions to implement RPA as they typically lack the budgets and the specialist staff needed to develop and manage bots.
But for Teachers Federal Credit Union, size wasn’t a barrier to implementing RPA.
“It’s no longer about the big beating the small in banking,” said Suresh Renganathan, Teachers’ chief technology officer. “It’s about the fast outrunning the slow.”
Teachers, which is based in Hauppage, New York, has a nationwide charter, assets of $8.8 billion, 380,000 members and 32 branches.
The credit union’s strategy for implementing RPA was to use software from Warrington, U.K.-based RPA vendor Blue Prism. Work started in the first quarter of 2021 with the help of Brookfield, Wisconsin-based banking software vendor Fiserv and Bangalore, India-based Infosys, Teachers’ development partner.
Teachers’ RPA initiative is part of a digital transformation program which also involved developing a digital account opening platform and online appointment booking.
“We prioritized the implementation of intelligent process automation to create efficiencies and facilitate an enhanced member experience,” said Brad Calhoun, Teachers’ president and CEO.
With automation in place, Teachers is ready to grow. “As we turn our efforts towards national expansion, we have the advantage of RPA, which gives our staff the necessary time to focus on initiatives with a direct impact on membership,” Calhoun said.
Currently, Teachers’ bots facilitate data extraction, entry, and processing. By April 2022, 16 business processes had been automated, up from 12 at the end of 2021. Unlike staff who work only five days a week, bots work every day.
In 2018, Teachers gained an open charter with the right to expand nationwide when it acquired Melrose Credit Union, which was based in Briarwood, New York. Teachers intends to start expanding to other states later this year, starting with Florida, Renganathan said.
By eliminating manual processes, RPA will help Teachers’ support a growing number of customers without adding to its staff, according to Craig Focardi, a principal analyst for retail banking at Boston, Massachusetts-based Celent.
Initially, some staff were concerned that automation might cause job losses. “We explained that RPA’s purpose is to complete their tasks and not to compete with them,” said Renganathan. “We don’t plan to reduce our employee numbers, but without automation, you can’t add scale.”
When it began its RPA implementation, Teachers formed a small cross-functional team to manage the initiative.
“My advice to anyone implementing RPA is to start small with simple, mundane use cases and create a central team to operate and monitor the system,” said Renganathan. “We started by automating repeatable, rule-based, predictable tasks through RPA, focusing on use cases with high volumes and backlogs. As we saw success, we shared the results internally, and now every department is jumping into RPA, and we have a huge backlog of processes to automate.”
On an annualized basis, Teachers’ bots are performing 160,000 transactions a year, saving around 15,000 employee hours a year, and providing monthly productivity savings equivalent to 10 full-time employees, said Renganathan.
Bots are providing significant savings in paper printing in Teachers’ loan department. “Instead of staff printing or scanning loan documents and uploading them into a document repository, the bots connect to the appropriate system to extract and upload images into servers,” said Renganathan. “This was especially beneficial during the pandemic when loan staff couldn’t come into the office to process loan documentation.”
Once a mortgage application closes, a bot automatically uploads the insurance policy supplied by the borrower to a server operated by Teachers’ insurance partner, Bedford, Texas-based State National.
Another implementation allowed Teachers to tackle a backlog of 17,500 collection letters in its back office. Its collections bot prints 500 collection letters daily, processing collection accounts on the same day as opposed to a multiple-day turnaround for manual processing.
In Teachers’ lending department, three bots are automating unapplied fund processing. Previously, loan or escrow payments that were submitted incorrectly would be held in an unapplied funds bucket, pending manual allocation. “RPA has resulted in productivity savings equivalent to 1.5 full-time employees by removing 75 manual process steps,” said Renganathan.
A bot that processes online banking applications has removed 48 manual steps and produced productivity savings equivalent to one full-time employee.
“The manual process involved a team member reviewing online banking applications and keying data into the banking application system to verify if the member was authorized for online banking,” said Renganathan. “This process took more than one working day, whereas the bot performs the same function on the same day, seven days a week.”
As bots can introduce errors, Teachers’ RPA operations team monitors exception reports and uses any errors that occur to educate the bots and improve their operation.
“When a financial institution adopts a new technology such as RPA, they need to do quality control checks on it,” said Celent’s Focardi. “Initially, you have to quality control 100% of the work that is done in RPA, but over time, you’ll see where there are potential errors or misreads and can do smaller quality controls on a smaller number of documents.”