In what will be a recurring feature, Finopotamus will touch base with business leaders to better understand how operations, technology and otherwise, have changed due to the COVID-19 pandemic.
By W.B. King
In early February, Coast Central Credit Union’s Vice President of Member Digital Services John Gracyalny was visiting Las Vegas when he first heard word of a nebulous virus called COVID-19.
“That’s not the place to be during a travel-propagated health crisis,” he recalled in July. “Thankfully I had no problems (there) and came back to work before we started seeing travel restrictions here.” The $1.8 billion Eureka, Calif.-based Coast Central CU serves over 71,000 members at 11 branch locations.
By March, the California had issued a lockdown mandate and by April, wearing protective masks in public was mandatory. And while the credit union wanted to continue providing as many services as possible, member and employee safety, Gracyalny said, was (and is) a paramount concern.
“We were able to leverage these declarations in an intense member communication effort, and coupled that with several changes to how we did business. With one exception, all member service branches (MSB) remained open for members (with modified hours), but we did reduce by approximately half the number of member service representative (MSR) stations in each MSB to maintain social distancing,” he explained. “We provided ‘greeters’ at the door to ensure compliance, maintain social distancing in the lines, provide hand sanitizer and offer curb-side service to members who were medically unable to wear masks.”
As is the case with most businesses, the manner in which services are rendered during the pandemic are in flux or have forever changed. And since financial institutions are considered an essential service, executives were forced to learn as they went along, and continue to do so. This has been a considerable undertaking for Coast Central CU and its approximate 250 employees.
“We have made some internal and back office changes to hopefully prevent the virus from being able to disable too many key people at once if it got loose within the organization,” Gracyalny explained. “Our executive team is spread over two administration buildings in two different towns, and we no longer meet as a team — all meetings are done via Zoom.”
Additionally, Coast Central CU’s Member Support Center (MSC) was split into two teams and into two buildings. This measure allowed team members to occupy every other cubical and maintain social distancing.
“A number of staff were allowed to work from home. Other departments went to half-staffing temporarily, both to maintain social distancing as well as to mitigate the risk of losing an entire department to the bug,” he said. “And a few departments, most noticeably Information Services (IS), were equipped to work from home.”
While there have been positive business takeaways gained during the pandemic, such as work-at-home success stories, it hasn’t all been rosy.
“I see two primary negatives. One is with the limitation of our local area’s telecomm infrastructure, where we are very limited on the number of additional phone lines we can provision to support the increased volume of MSC calls,” Gracyalny reflected. “The other issue is also local, in that a significant number of members don’t have easy access to broadband internet connections, and therefore find it easier to use telephone banking than to try and use online banking at dial-up speeds. And telephone banking has long been seen by the industry as a dying technology, supplanted by online and apps.”
A consequence of the aforementioned perception, he added, is that development of telephone banking technology has not happened for a number of years. “Those members without broadband have significant limitations on what they can do without visiting one of our locations.”
Looking Back to See Forward
Gracyalny’s credit union industry career spans more than 30 years, most of that time operating in what he called “big city” tech environments in the Bay Area. Prior to joining Coast Central CU, he had retired after spending the previous 12 years as the vice president of Information Technology for the San Francisco, Calif. – based SafeAmerica Credit Union.
Among incentives that enticed him out of superannuation was the opportunity to oversee Coast Central CU’s core conversion, which was completed last year. Gracyalny said he was initially on the fence about assuming the new role and moving to what he refers to as the “lost coast,” but he couldn’t resist taking a core conversion ride.
“I guess I’m one of the tech world’s equivalents to an adrenaline junkie because I love the pressure and intensity of a core conversion environment,” he said. “Anything to keep from getting bored!”
While most IT executives might oversee one core conversion during their career, Gracyalny now has two under his belt, completing his first while at SafeAmerica CU. But it wasn’t just the core conversion project that lured him to the Humboldt County, Calif. region. He was also attracted to the unique role Coast Central CU was playing in the area. Bank of America, he noted, had pulled out of the region a few years earlier and Wells Fargo and Chase were maintaining a minimal presence. This presented a unique opportunity for Coast Central CU to spread the credit union ethos of “people helping people.”
“About 40% of the tri-county residents are members and we have over a 50% share for auto loans. As a result, we take our responsibility to the community at large very seriously; our executives and managers are all very involved in local civic organizations and charities,” he said. “After 30 years in the CU world, I’m finally seeing what a credit union should be all about. And I’m loving it!”
A Core Conversion COVID-19 Silver Lining
Having solid leadership is essential, especially when undertaking the often herculean task of a core conversion, which Coast Central CU successfully executed in November 2019. Founded in 1974, it was the credit union’s first core conversion in 30-plus years. The success of the project rollout, Gracyalny said, has made operations during COVID-19 more streamlined.
“One advantage of a newer system is that their code base is relatively straightforward and stable. The longer a codebase is used, the more it gets enhanced and modified and maintained, and the more convoluted the code gets – what I refer to as ‘spaghettified’,” he said. “Therefore older systems are less stable and less reliable. Between a rock-solid core and the heavy use of process automation tools, a relatively small percentage of IS time goes to maintaining the core system. Far more time is spent with the several dozen third parties that plug into it — from online banking and card processing on the input side to statement and notice printing on the output side.”
All things considered, Gracyalny said the pandemic hasn’t had a huge impact on the credit union’s tech operations. At the time of the lockdown, the IS department, which is comprised of 10 employees, was almost entirely working remotely, but most have returned to the office.
One challenge that the CU faced both before and during COVID-19 is finding and training suitable IS tech employees.
“Part of our IS staff are young people that had no training but a good aptitude for tech. Our vice president of IS, Ed Christians, has done a magnificent job of training them and making do, given the local limits on both human and infrastructure resources,” explained Gracyalny. “He is one of the true heroes in the organization.”
Members Are Embracing Tech More Than Ever
Over the course of the last several months, Coast Central CU has realized a significant uptick in its members’ use of remote access channels. The credit union’s mobile app’s remote deposit capability, for example, is now processing over double the number of checks each month, from 7,000 to 14,000, noted Gracyalny.
“I see that as a great win as even at, say, three checks per deposit, that reduces the number of MSB visits by 3,000 per month,” he said. “That not only keeps our members and staff safer, it also significantly reduces staff time to process the deposits.”
A similar spike in deposits has been made at the Coast Central CU’s ATMs. Prior to COVID-19, there was one ATM deposit for every two ATM withdrawals. Now the CU is realizing two deposits for every withdrawal.
“Again, this really reduces MSB traffic. And, of course, our staff that supports our online and mobile banking products has seen a dramatic increase in members asking for assistance with enrollment, with a 25% increase from March 1 through May 1, and about a 33% increase in usage.”
The pandemic has also led Coast Central CU to accelerate to a “paperless” environment. To this end, there is an ever-increasing usage of digital signature technology.
“We are going from just using it for online loan and membership applications to becoming the new standard for both member service and internal use,” said Gracyalny. “I expect that by end of summer ‘wet’ signatures will become the exception rather than the rule for everything from member forms to internal HR forms.”
While California has realized a second spike in COVID-19 cases, Gracyalny said that he doesn’t believe the country is deep enough into the pandemic crisis to fully understand what will be the “final total economic displacement.” From his vantage point, though, he sees technology driving the recovery.
“Certainly the migration from in-person to remote services will continue. This brings efficiencies that can have a positive impact on credit unions’ bottom lines, which could in turn lead to more ability to fund ongoing technology upgrades and development,” he noted.
“I also see a positive in a long-term growth in interchange income, as more and more consumer transactions move from cash to plastic,” he continued. “We are currently investigating ways to provide plastic to members who ordinarily would not qualify while at the same time still minimizing our risks from fraud and abuse.”