Teachers Federal Credit Union uses robotic process automation to improve operational efficiency and eliminate manual tasks, and fuel its nationwide expansion.
Large banks have seen significant benefits by adopting RPA, a technology that allows businesses to deploy software to perform mundane tasks previously performed by staff. It is difficult for small financial institutions to implement RPA as they typically lack the budgets and specialized staff needed to develop and manage bots.
But for the Teachers Federal Credit Union, size was no barrier to RPA implementation.
“It’s no longer about big beating small in banking,” said Suresh Renganathan, Teachers’ Chief Technology Officer. “It’s about the fast overtaking the slow.”
Teacherswhich is based in Hauppage, New York, has a national charter, assets of $8.8 billion, 400,000 members and 32 branches.
The credit union’s strategy for implementing RPA was to use software from Blue Prism, an RPA provider in Warrington, UK. Work began in the first quarter of 2021 with the help of banking software provider Fiserv in Brookfield, Wisconsin, and Infosys in Bangalore, India, teacher development partner.
The Teacher RPA initiative is part of a digital transformation program that also involved the development of a digital platform for online account opening and appointment scheduling.
“We have prioritized the implementation of intelligent process automation to create efficiencies and facilitate a better member experience,” said Brad Calhoun, President and CEO of Teachers’.
With automation in place, Teachers is ready to grow. “As we shift our focus to national expansion, we have the benefit of RPA, which gives our staff the time they need to focus on initiatives that directly impact membership,” Calhoun said.
Currently, Teachers robots facilitate the extraction, entry and processing of data. By April 2022, 16 business processes had been automated, compared to 12 at the end of 2021. Unlike staff who only work five days a week, bots work every day.
In 2018, Teachers was granted an open charter with the right to expand nationwide when it acquired Briarwood, New York-based Melrose Credit Union. The teachers plan to start expanding to other states later this year, starting with Florida, Renganathan said.
By eliminating manual processes, RPA will help Teachers’ support growing numbers of customers without increasing its staff, according to Craig Focardi, principal analyst for retail banking at Celent.
Initially, some staff feared that automation would lead to job losses. “We explained that the purpose of RPA is to accomplish their tasks and not to compete with them,” Renganathan said. “We don’t plan to reduce the number of our employees, but without automation you can’t add scale.”
When it began implementing RPA, 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,” Renganathan said. “We started by automating predictable, rules-based, and repeatable tasks with RPA, focusing on use cases with high volumes and backlogs. As we saw success, we shared the results internally, and now every department is getting into RPA, and we have a huge backlog of processes to automate.
On an annualized basis, Teachers’ robots perform 160,000 transactions per year, saving around 15,000 man-hours per year and providing monthly productivity gains equivalent to 10 full-time employees, Renganathan said.
Robots provide significant savings on paper printing for Teachers’ loans. “Instead of staff printing or scanning loan documents and uploading them to a document repository, bots connect to the appropriate system to pull and upload images to servers,” Renganathan said. “This was especially beneficial during the pandemic when loan staff could not come into the office to process loan documents.”
Once a mortgage application is closed, a robot automatically uploads the insurance policy provided by the borrower to a server operated by Teachers’ insurance partner, State National, based in Bedford, Texas.
Another implementation allowed Teachers to tackle a backlog of 17,500 collection letters in their back office. Its collections robot prints 500 collection letters per day, processing collection accounts the same day, as opposed to taking several days for manual processing.
In Teachers’ Lending Department, three robots automate the processing of unapplied funds. Previously, incorrectly submitted loan or escrow payments were held in an unapplied funds category, pending manual allocation. “RPA has delivered productivity gains equivalent to 1.5 full-time employees by eliminating 75 manual process steps,” Renganathan said.
A bot that processes online banking applications eliminated 48 manual steps and generated productivity gains equivalent to a full-time employee.
“The manual process involved a team member reviewing online banking applications and entering data into the banking application system to verify if the member was authorized to use online banking,” Renganathan said. “This process took more than one business day, while the bot performs the same function on the same day, seven days a week.”
Because bots can introduce errors, Teachers’ RPA operations team monitors exception reports and uses any errors that occur to educate bots and improve their operation.
“When a financial institution adopts a new technology such as RPA, they have to perform quality checks on it,” Celent’s Focardi said. “Initially, you should quality check 100% of the work done in RPA, but over time you will see where there are errors or potential misreads and can perform smaller quality checks on a more small number of documents.”