By Kathy Hooker Burress
The payments business model has changed drastically over the last 10 years. Thanks to new rules, credit unions face increased compliance and expectations from regulators. New payment methods, especially mobile, have also resulted in higher consumer expectations.
In particular, the first of NACHA’s same-day ACH rules goes into effect Sept. 23, just a few days from now. It will only apply to credit transactions, but by September 2017, both debit and credit transactions will need to be processed the day they’re received.
Given consumers’ current service expectations, those who wish to maintain market share must embrace same-day ACH services. Consumers – particularly Millennials – find the current two to three business day ACH wait time unreasonable, and that slow service fuels the generation’s overall dissatisfaction with credit unions.
These days, if a service is technologically possible, consumers of all ages expect businesses to provide it. And same-day ACH is already passé for consumers – before long, credit unions will be expected to provide same-hour ACH.
As service expectations continue to gain speed, automation is the only answer. I am often stunned at how many credit unions still manually process ACH payments.
For starters, manually reviewing and processing ACH files leaves a lot of room for error. Not only do processing errors increase your credit union’s financial risk, your credit union also risks loss of market share due to poor reputation. And, you’ll have some explaining to do when your examiner asks about all those errors.
Inefficient & Time Consuming
It’s also extremely inefficient and time consuming to process ACH payments manually. An employee must download the files from the Federal Reserve, check them, upload them to the credit union’s core system, manually process them, download them from the core and upload them back to the Fed. And, this process must be repeated several times a day. If your credit union plans to offer same-day ACH, you’ll have to meet specific processing deadlines each day.
Credit unions that manually post ACH transactions can already barely keep up with their existing payments framework. Unfortunately, most credit unions don’t realize they can automate ACH, because it can be a complex process. Thankfully, it’s not only possible, it’s actually easier than most credit unions expect.
Not only do automation tools reduce errors, they free up operational and IT staffers to devote their time to tasks that serve customers and generate revenue. Employees who previously processed ACH transactions can instead focus on monitoring the system for problems, and are now free to quickly diagnose and troubleshoot problems.
Consumers Expectations
Oftentimes, the most difficult part of adopting automation solutions isn’t the actual conversion or training involved, it’s letting go of the perceived control that comes with automation. But once credit unions make the leap to automation, they discover they have more control over accuracy and quality service than before.
And that’s a good thing, because consumers already expect it.
Kathy Hooker Burress is president of SMA Solutions, headquartered in Kingwood, Texas. She can be reached at 281-446-5000 or khooker@smasolutions.it.