February 07, 2003

With technology, a simple focused solution is oftentimes better than a wholesale systems replacement.

First State Bank, a $75 million community bank in Clute, Texas, began electronic statement delivery just a year ago. Within six months, it had already achieved payback on its investment.

Not only has technology enabled the bank to deliver customer statements faster, but it's also reduced printing costs plus labor and postage. "Statistically, it has cost about $15 per year to send out statements," said Tony Brinson, vice president of information services at First State Bank. "That is reduced to next to nothing if you send it out over the Internet."

Electronic statement delivery brings annual costs down to around $1.20 per account-a 92 percent savings. "We estimate that we're saving more than $16,000 a year, which is very significant to us," said Brinson.

First State Bank began offering consumer Internet banking in June 2001 through Premierecom software from Information Technology (ITI), Lincoln, Neb. When ITI's Director Document Distribution software became available, the bank added electronic statement delivery to its services.

ITI was already supplying many of the bank's core systems. "My recommendation was an easy one to make," said Brinson. "It was much easier on me and my department to have an online real-time system. There's no sending balances or sending transactions. It just runs online with a host, and there's very little maintenance required."

Document Distribution also gave the bank a choice between pushing or pulling statements. First State Bank favors the use of pull statements, enabling customers to retrieve statements from First State Bank's Web site. Through this method, customers are automatically notified by e-mail when new statements are generated and available.

"We prefer this method of delivery because it presents an excellent opportunity to promote other products and services," said Brinson. "This also provides a way for our customers to review online balances or research check images and past statements."

The other method, push statements, uses e-mail to automatically transmit to customers a password-protected statement in an encrypted pdf format. "We do a few pushes to CPAs," said Brinson. "If customers need a paper statement, then we say we have another alternative. We send them an encrypted statement and supply them with a password to open it up."

Document Distribution is especially popular with First State Bank's commercial customers, who now receive statements on the first business day of the month, instead of waiting for them to arrive by mail.

The biggest headache, Brinson says, is bounced e-mails, which average two to five percent per month. Bounced e-mails, which are caused by a changed address or full mailbox, are printed out and forwarded to another department, which sends a letter to the customer.

About 1,200, or 20 percent, of bank customers are receiving electronic statements. During conversion, customers were given a silver dollar for signing up for Internet statement delivery. "I think that's important," said Brinson. "People either need a break in the service charge, or they need some little extra something to sign up."

The number of customers receiving electronic statements is expected to increase over time. New customers are informed that electronic statements are the preferred form of delivery. They, too, are offered a coin to encourage sign-up.

The bank will likely add savings account statements and notices. Bill pay and account aggregation are planned by mid-year.