Hooking customers at a young age is a sure way to build future business. WSFS Bank, a subsidiary of WSFS Financial Corp. ($2.4 billion in assets), saw an opportunity to capture the business of students at the University of Delaware by providing low-cost remote channels for most of their banking needs, with 10 ATMs located throughout the campus and neighboring locations.
In negotiating with the university, however, the bank also agreed to place a full-service branch in the student union. But the cost of maintaining the branch was significantly more than the revenue generated by student accounts over the first five years the branch was open. In 2002, four years after opening the branch, the bank needed to reduce operating costs without losing student business, according to Tom Stevenson, president of Cash Connect, WSFS Bank's ATM division.
Though he declines to reveal how much money the bank was losing, Stevenson says it was enough that the bank considered ending its partnership with the university. To reduce transaction costs, WSFS decided to reduce student reliance on teller transactions. "We had a 1-to-1 ratio between teller and electronic transactions," Stevenson explains. "We wanted to migrate student behavior toward the electronic channel. We decided to use a combination of pricing, promotion and education."
Cash Connect added an ATM at the branch location in August 2003, pushing students to the machine by charging $3.50 for teller transactions. Students could opt for a flat-fee, full-service account to eliminate the $3.50 fee. As a result, electronic transactions outpaced teller transactions by a 4-to-1 ratio. But that was only the beginning.
To increase student ATM usage even more, Cash Connect officials looked deeper into ATM technologies that they had started to consider in late 2002. ATM manufacturers NCR (Dayton, Ohio) and Diebold (North Canton, Ohio) both were touting machines with imaging, speech and other high-tech capabilities, Stevenson recalls. "We wanted to make [ATM] transactions even easier," he says. "They both had excellent products." WSFS ultimately decided to go with the NCR solution.
The next phase of the initiative was to remodel the branch into a "WSFS e-zone," complete with an online banking workstation, two customer service telephones and two NCR Personas M Series ATMs, which were installed in October 2004. The Personas M Series machines feature no-envelope deposit technology and accept both checks and cash. The machines display images of deposited checks on screen and print images on receipts, providing proof of the deposit. Receipts also show a tally of deposited cash listed by denomination.
Next Window, Please
The redesigned branch no longer has teller windows. Instead, it includes two sections: an area with the ATMs and online workstations and an office with seated bank employees who can open accounts, answer questions and, if necessary, handle transactions. Staff has been reduced from 4.5 full-time employees to 2.5 full-time employees.
According to Stevenson, the implementation of the new ATMs went smoothly. There was no need for the bank to change any hardware or software systems in order to install the NCR machines. "The installation was perfect," he says.
In the first calendar quarter since the deployment, the ratio of electronic-to-teller transactions has increased to 8-to-1. "It's been extremely well received," Stevenson says. "The students love it. There have been no jammed checks or hardware failures."
Stevenson expects to increase the ratio of electronic-to-teller transactions even further, which would help drive the university-bank partnership - which now is roughly at break-even - to profitability. "We are considering adding future digital imaging ATMs in other select locations in the near future," Stevenson adds.
Institution: WSFS Bank, a subsidiary of WSFS Financial Corp. (Wilmington, Del.).
Assets: $2.4 billion.
Business Challenge: Increase ratio of electronic transactions to teller transactions.
Solution: Personas Series M ATMs from NCR (Dayton, Ohio).