At a Glance
• Estimated USD 1 million reduction in charge-offs and increase in recovery payments of USD 1 million
• Expected 10% reduction in headcount requirements for the coming year
• 100s of hours will be saved each month by outsourcing production and mailing of 50,000 letters
• One loan management system provides access to multiple third-party services
First Tech Federal Credit Union provides personalized financial services that help almost 650,000 members to thrive and support their families. Founded in 1952 by employees at Hewlett-Packard and Tektronix, the credit union serves members working primarily at leading technology companies, such as Amazon, Microsoft, Google, Cisco, and Intel, in the United States and across 95 countries worldwide.
Troy VanRiper, Vice President, Special Assets Management at First Tech, explains: “We have grown rapidly in recent years, from total assets of USD 2 billion in 2012 to almost USD 17 billion today. That makes us a top-ten credit union in the United States, with a member footprint stretching nationwide and beyond.”
One reason for this rapid growth is First Tech’s member-first philosophy, as Troy VanRiper notes: “Our tech-savvy members expect seamless, best-in-class experiences. To meet this demand, we are always innovating: for example, we were one of the first American financial institutions to offer online banking, and we are currently launching intuitive self-service tools. The goal is always to make life easier for members.”
Creating a frictionless experience for loan origination
In its lending division, First Tech has partnered with Temenos for 20 years to develop and launch first-class member services. To create fast, frictionless online application journeys for its lending products, the credit union uses Temenos Consumer Loan Origination. In 2022 alone, First Tech originated more than USD 5 billion in consumer loans, with lending volumes increasing by 25.3 percent.
“For the most part, our members want to apply for loans online, without having to take time out of their schedule to visit a branch. With Temenos digital banking, our consumer lending group can satisfy their requirements, enabling members to complete the process anytime, anyplace.”Troy VanRiper, Vice President, Special Assets Management at First Tech
Offering a helping hand while protecting against risk
First Tech faces more challenges during the later stages of the lending lifecycle. When members fall behind on loan repayments, the collections and recovery team must strike a fine balance between offering effective support and protecting the credit union against risk of default and financial loss. The scale of the task has become much greater in recent years due to tough economic conditions.
Troy VanRiper explains: “Many borrowers have been feeling the strain of rising inflation and cost of living over the last 18 months. As a result, we are seeing loan delinquency rates increase, as members struggle to make repayments. To tackle this, we wanted to improve our outreach to help members in need before the issue escalates further. But we also had limited resources to solve the growing problem.”
Harnessing best-in-class collections management tools
To improve its loan management processes, First Tech selected Temenos Collections—a purpose-built solution that helps to mitigate delinquency and protect income from lending operations. The credit union uses the Temenos solution to track member loan repayments, and to connect with third-party financial services that enhance the effectiveness of its collections and recovery activities.
For example, First Tech uses the SWBC AP Account Services connector in Temenos Collections to enlist extra resources for communicating with members who have missed repayments. The connector allows the credit union to share information on loan delinquency with financial service provider SWBC, whose team of collectors call and send reminders to members to encourage payment.
Through the LiveVox connector, First Tech will gain automated phone dialing, which will enhance the productivity of its collections team when communicating with members. The credit union is also deploying the TransUnion connector, a credit scoring tool to analyze the probability of delinquent members being able to make repayments, and to identify any collectible assets they hold.
In addition, First Tech is planning to adopt the XDI connector. Currently, the credit union manually sorts and sends 50,000 pieces of mail on delinquent loans each month, such as repayment reminders. The XDI connector will allow First Tech to export data to Xpress Data Inc., which will handle production, packing and dispatch of mail.
“The connectors in Temenos Collections are so valuable. They enable us to manage almost every step in our loan servicing workflows from inside one platform, so there is no need to click between different systems or manually transfer files between departments. I recently met with SWBC, and I told them that being able to access their services through Temenos digital banking was a massive advantage.”Troy VanRiper, Vice President, Special Assets Management at First Tech
Providing effective support to members in need
With Temenos Collections, First Tech can offer more proactive support to members struggling with repayments. For example, credit scoring will help the credit union to identify delinquent loans that are at high risk of default earlier. First Tech can then intervene with more effective assistance, such as refinance or skip payment options, or alternative loan products. Or, if members are at low risk of default, the credit union can limit its outreach to a simple payment reminder via SMS or voicemail in the early stages of delinquency.
“Earlier identification and intervention on delinquent loans will enable us to mitigate risk. We estimate that Temenos Collections will help reduce USD 1 million from our annual charge-offs, where we write off loans as losses. And when we do have charge-offs, we expect credit scoring will help identify more collectible assets and contribute to an increase of USD 1 million in recovered payments.”Troy VanRiper, Vice President, Special Assets Management at First Tech
Scaling lending operations without adding to headcount
Accessing third-party services through Temenos Collections is helping First Tech to manage higher delinquency volumes, without hiring more full-time or temporary employees, as Troy Van Riper confirms: “The Temenos solution allows us to scale our outreach, without adding to headcount. We estimate that Temenos Collections will reduce headcount requirements by 10 percent for the coming year.”
First Tech is also confident that Temenos Collections will help to improve the efficiency and productivity of its collections and recovery team. For example, using the XDI connector to process mail will save hundreds of hours every month, freeing extra time for more value-add work and training sessions.
“The support from Temenos is excellent: whenever we have questions, we always get quick answers. We often recommend the platform to our peers, and we love that Temenos are always improving the capabilities available. Without a doubt, Temenos has played a key role in our growth, helping us to improve the efficiency and profitability of our lending, collections, and recovery processes.”Troy VanRiper, Vice President, Special Assets Management at First Tech