Building a Profitable Foundation with Technology

Brintech Client Case Study
How Citizens Union Bank maximized profitability with a strategic focus on technology.

On September 9, 2003 , Citizens Union Bank, a $358-million bank in Shelbyville , Kentucky , won the “Excellence in Technology” Award from the Kentucky Bankers Association. According to Billie Wade, CUB’s President and CEO, “As they began to read the description of the technological achievements of the winner, I immediately knew that they were talking about CUB.” Over the past three years, Citizens Union Bank has worked with Brintech to develop and monitor the bank’s ongoing strategic technology plan, and the work has reaped great rewards.

Capitalizing on Technology for Strategic Success

In 2000, as the bank was working with Brintech to develop the bank’s core strategic technology focus, networking emerged as one of the key issues that would take the bank to the next level in technology functionality and profitability. At that time, Brian McMullan, CUB’s IT Manager, was brought on board. His first task was to implement a TCP/IP infrastructure that would run Windows servers for file and print sharing, e-mail, and Internet access.

Implementing that key enabling technology led to a series of significant branching and technology improvements at the bank:

Again in 2003, CUB is working with Brintech to review and update the bank’s next three- to five-year strategic technology plan. Additionally, the bank possesses an internal Strategic Planning Group that develops an annual plan for all aspects of the business, including technology.

The Range of Technology at Citizens Union Bank

For a bank of its size, Citizens Union Bank boasts a remarkably sophisticated technology infrastructure. For core processing, CUB runs JHA 20/20 on an AS400. The network infrastructure consists of TCP/IP WAN networked branches and Citrix Thin Client for the majority of the users, which provides easy and secure access to the AS400, e-mail, Internet, intranet, and office productivity applications. Peripheral software includes JHA Streamline for loan and deposit platforms and Bankware for item processing. In addition, CUB utilizes image signature cards, has an advanced Internet banking offering, and >offers a fully-staffed customer center.


Billie Wade accepts CUB’s “Excellence in Technology” Award

Three key components enabled CUB’s technology to become the strategic backbone of the bank:

The Technology Management Process. Technology management is a working, regular part of bank management strategy at Citizens Union Bank. Each month, the Technology Committee, which consists of executive management, the IT manager, and business unit managers, works closely together to assess, plan, and implement technologies that support the bank’s strategic business objectives.

The Technology Decision Making  Process. In addition to the Technology Committee, CUB has a Strategic Planning Committee and a Users Group Committee. The Users Group Committee meets weekly to review any training or other technology-related issues that managers have found in the day-to-day work process. The Chairman of the Technology Committee also sits on the Strategic Planning Committee, which meets on an annual basis and relies on the updated information of the Technology Committee.

The Technology Measurement Process. Citizens Union Bank measures its success in several ways. First, the Users Group Committee monitors the day-to-day workings of technology throughout the bank. Second, the monthly Technology Committee meetings monitor the major findings of the Users Group, and the quarterly Board of Directors meetings also serve to update the key decision makers at the bank on the relative success of the bank’s technology. Both the annual Strategic Planning meetings and quarterly follow-ups also monitor the bank’s technology progress. For CUB, success is proven by the degree of completion of the strategic plan and by the results of improved customer service, streamlined operating efficiencies, and the growth of the organization.

CUB’s organizational structure boasts a lean operating environment, promoting open communications and flexibility. CUB’s key decision makers include the board of directors, an executive management team of three officers, and departmental managers, including a representative from IT. In addition to its lean AS400 Operations and Item Processing teams, CUB requires only two team members to support its end-user devices, thanks to Citrix.

“With its effective organizational structure and commitment to making technology a foundational aspect of the bank’s strategic operations, Citizens Union Bank has proven itself to be a leader in community banking technology strategy,” says Laurie Peters, Principal at Brintech and one of the key consultants who worked with CUB to implement its technology planning processes. “The ‘Excellence in Technology’ Award that CUB received demonstrates that their peers also recognize the strides they have made, and the importance of an effective technology strategy to the overall profitability of the company.”

According to Billie Wade, “Each of us at CUB is pleased to be recognized for our technological advancements over the last five years. We believe that our advanced technology leads to superior customer service and products, and that with it, our employees are well equipped to perform their jobs in the most efficient manner.”

Reactions from Four Key Groups. While CUB considers its own technological advancements an unqualified success, the bigger test would come from four key audiences – the bank’s regulators, customers, employees, and competition.

Regulatory Reaction. While CUB’s technology improvements have benefited the bank tremendously, they have also led to more regulatory scrutiny. Because of the committee organization and regularly monitored technology progress, however, Citizens Union Bank has received continued high marks on FDIC examinations and from third-party auditors.

"We believe our advanced technology leads to superior customer service and products."

Customer Reaction. Customer response to CUB’s technology advancements has been overwhelmingly positive. “Our customers can now communicate with us over so many diverse delivery channels,” says McMullan, “that nearly every customer group has access in a way that works for them.” Customer touch points on the CUB network include e-mail or telephone, Internet banking, a telephone teller system, and the full-service call center, in addition to traditional branch customer service. Front-line associates working any of these delivery touch points can provide services to customers on demand, from any location, at any time.

Employee Reaction. “Our employees feel as though we have come ‘out of the dark ages’ technologically,” states McMullan. All of CUB’s dumb terminals have been replaced by intelligent devices, mostly thin devices powered by Citrix, and approximately 20 percent PCs. Employees now work with consistent,  standardized software versions and can logon anywhere in the organization and have access to all their applications, data, e-mail, Internet customer transactions, statements, check images, and signature cards. The employees are more connected, more efficient, and ultimately more profitable to the bank.

Competitor Reaction. While CUB has not received any direct competitor reaction, it is not uncommon for employees at other institutions to comment, “You can do that?” or “We do that, as well, but it takes hours!” While other institutions of comparable asset size and structure have similar technology, CUB’s level of integration and in-house expertise has clearly set the institution apart from its peers.

The Bottom Line

“Citizens Union Bank’s commitment to technology has allowed the bank to excel not only as a technologically advanced organization, but as a more strategically sound, generally profitable institution,” says Peters. “They have realized that the return on investment is not measured in a vacuum, in which they try to determine the direct ROI of a particular piece of software or equipment. Instead, the ROI is best demonstrated on the bank’s bottom line – as CUB has become a more profitable, flexible, and growth-oriented organization.”

Donna Miller, EVP at Citizens Union Bank, agrees, “While it is too soon to see any bottom line difference on the technology itself, our investments will undoubtedly reduce our staffing needs in the long term. Management has committed to monitoring the long-term investment rather than demanding a short-term return.”

“Ultimately,” says McMullan when recommending a similar strategy to other banks, “don’t implement technology for technology’s sake.” The bank has worked with Brintech to build a solid foundation of  strategic goals, core technology, and key managers who understand the bank’s business to determine where technology can work to improve the operating processes.

The Citrix environment itself has solved a host of problems for CUB. According to Kevin McKenna, one of Brintech’s networking consultants who worked extensively with CUB, “A thin-client model was the natural solution for the problems CUB was facing.” With Citrix, the bank has standardized software installations and upgrades, eased licensing requirements, centralized user data, centralized security management and control, and made every service available to every employee, whether they are in the bank, on the road, or at home.

Comments Brian McMullan, “The Brintech team, including Kevin McKenna and Mark Holley, who implemented the base Citrix environment with CUB in November 2002, tuned their installation to accommodate the bank’s need for training so that CUB could grow Citrix internally after the base installation.” The flexibility allowed by the new environment has created numerous opportunities for profit improvement throughout the bank.

The management structure at CUB remains thin, which allows for easier communication, quick decisions, and rapid response. Ideas for new technologies and processes come from everywhere in the bank – from Executive Management, business line managers, and IT, and the cohesive committee structure at the bank cooperates to analyze the full impact of all projects from business, training, and technological perspectives.

“Brintech plays a solid role in our overall activities,” according to McMullan. “They know what other banks our size are doing, how they do it, what works, and what doesn’t They are a sounding board for our ideas and a technical resource during implementation.”

Brian McMullan (left) and Billie Wade with KBA’s “Excellence in Technology Award”

 

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