When mailing thousands of statements a month, shaving a few cents off each one can add up to big savings.
So discovered First National Bank & Trust. By installing mail automation software, the Kokomo, Ind.-based institution was able to cut mailing costs by four cents an item on half of the 100,000 statements it mails each month, for a saving of $2,000.
By eliminating the need for a third-party sorting house, the technology helps the bank run more efficiently and "puts us ahead of the industry," said Terry Runyon, vice president of item processing at First National Bank & Trust.
Runyon inherited the statements area about two years ago. "I didn't have a lot of experience in statements," he said. "Postage and mail services were a new function for me."
That outsider perspective allowed him to quickly see that the process was inefficient. "I discovered that we spent a tremendous amount of time manually handling the majority of the statements we printed."
Using staff in that manner, he said, was "time consuming and costly to the bank."
Runyon also reviewed postage costs, which are a "significant expense for any institution." He learned that the bank was using a third-party sorting house, which charged a fee for each item it touched. That's when he began searching for an alternative.
Around that time, Runyon also learned of AutoMail Pro, a mail automation system from SynTel, Jonesboro, Ark. The product is a PC-based manifest mailing system that integrates with a firm's statement mailing process and employs protocols certified by the United States Postal Service.
The product is compatible with the postal service's Coding Accuracy Support System (CASS), which translates addresses into barcodes, and its Presort Accuracy Validation and Evaluation (PAVE) platform.
AutoMail Pro allows users to count pages, calculate weights, assign appropriate postage and print a mailing manifest that drills down to the carrier route codes or postal walk. The mail is presorted, which lowers postage costs.
With banks under pressure to cut administrative expenses, automation alleviates the tedious and costly processing of monthly statements. And with postal rates expected to rise as much as 33 percent over the next few years, banks will be under even more pressure to trim mailing costs.
In some instances, the SynTel software can reduce mail rates from 37 cents to as low as 27.5 cents, a savings of close to 28 percent. SynTel is eyeing regular mailings that banks make other than statements, such as year-end tax notices.
First National was live within two days of installing the system in June 2001, and in full production three months later. The bank uses three Hewlett-Packard printers, and a Bell & Howell mail folder and inserter.
To mail a statement, the bank simply builds a statement file, which is processed through the mailing automation software. The statements are printed, folded and inserted into envelopes.
The software calculates the weight for the statements and runs the CASS certification routine, providing accurate Zip codes and delivery routes. It generates the correct postage and appropriate bar code address labels, which are affixed to the envelopes. The mail is sorted and then turned over to the post office.
"They don't have to touch it," Runyon said. The postal station simply "hands it to the carrier. That's where the benefits are."
The system also prints reports that the postal service requires for the manifest mailing, plus "kicks out reports that basically lists all the addresses that did not CASS certify," said Runyon.
The end result is that the bank has been able to cut processing expenses, create customized mailings and insert additional literature geared to a targeted client segment.
One of the biggest challenges in implementing the system was working with the local post office "to make sure they understood what manifest mailing is," said Runyon. "We're only the second organization using it. It's a very new product for local post offices in Kokomo."
Runyon cautions other banks to "look at your demographics" before deciding to use manifest mailing, and to make sure the bank is in a location where "you'll see postal savings based on the presort rate. If you're in the middle of nowhere, a lot of addresses will not CASS-certify, so you're not going to get the bang for the buck."
INSTITUTION: First National Bank & Trust
ASSETS: $1 billion
BUSINESS CHALLENGE: Reduce statement mailing costs through presorting.
SOLUTION: AutoMail Pro
KEY QUOTE: "We spent a tremendous amount of time manually handling the majority of the statements we printed."
- Terry Runyon, VP of item processing