Make cool member offerings cool for staff, too, by better coordinating batches with your core. By Jason O’Brien Sponsored by SWBC 
Payment options and consumer convenience are all the rage. You can’t peruse a credit union trade publication or website without reading about the growth of fintech and financial management applications and how they affect the relationship you have with your members. And these are things we should be talking about. Technology and changing consumer expectations will have an impact on traditional financial transactions, and credit unions have to be prepared to meet this consumer demand, or risk losing engagement with a future generation of members. However, credit unions should not lose sight of the implications that deploying new payment technology has on the back end and on the bottom line. One of the most critical parts of payment processing is the settlement of funds to your members’ accounts. Initially, when you launch a new payment channel, it may be okay to have a team member manually run reports and process the individual credits that have been issued to an operating account at the financial institution. However, as your payment volume increases, this approach will become more and more prone to human error, especially when the person who usually does this work is out. As the number of transactions goes up, it may also be harder for staff to process them in a timely fashion without sacrificing other work duties. Credit unions can remove this manual overhead in several ways. For instance, an automated processing routine can be set up to pull credits from a CU’s core through a payment processing system, such as our software, Auto Pilot, and automatically credit them to member accounts. This automated system can make the credits happen more quickly—even on the same day as the payment—than using typical ACH processing through the Federal Reserve. In addition, a credit union’s processor can credit loan payments back to the CU in one of two ways:
- Batch ACH—through which a lump sum is sent to the credit union’s account. From there, the CU allocates the funds out to individual accounts, or
- Loan-level ACH—through which ACH payments are credited directly to a members’ account.
Notably, since we are talking about ACH credits, it could take up to two banking days before the credit ultimately gets applied to a member’s account. Also, your core ACH processing engine needs to be configured to accept this type of ACH credit. This is often a default capability; however, we’ve seen instances where configurations were needed or the ACH processing engine simply didn’t support the capability. As a processor in the payments space, we often see clients learn to “live with” manual reconciliation as a result of limited IT resources. We encourage re-evaluating the need on at least an annual basis, and making a decision to transition to automated reconciliation efforts based on where payment volumes will be next year, not where they are today. Forecasting volumes a year out gives IT staff time to plan the effort, and the operations team more substance on the concern—encouraging making this more of a priority. All of these manual processes and inefficiencies add up to a sizeable investment when you consider the time and effort spent each day. While it may require likely limited IT resources to ensure batch integration with the core, it is time and resources well spent. You’ll save both money and time by integrating your process from end-to-end, from origination to reconciliation. Jason O’Brien is SVP/payments of CUES Supplier member SWBC, San Antonio, Texas. Check out SWBC’s free ebook, Improving Operational Efficiencies with Payment Processing Technology, to learn if your payment technology is affecting your bottom line. Also from SWBC on CUES Skybox, read “How Does Your Skip Coverage Measure Up?” You may also be interested in reading “Fast Track: Headache or opportunity? Sorting out the impact of Same Day ACH” from Credit Union Management magazine. If you liked this post, you may also be interested in attending the School of IT Leadership, slated for Sept. 27-29 in Charleston, S.C.
