4-page Case Study - Posted 4/23/2009

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Umpqua Bank

Bank Consolidates Online Services to Gain Flexibility and Double Usage to 40 Percent

Oregon-based Umpqua Bank is known for its strategy of using its branches as customer-friendly sales sites. To extend that same inviting atmosphere to its Web site, Umpqua Bank adopted Voyager Consumer Banking from Fiserv—based on Microsoft® operating system and data management software—to create a personalized suite of online banking services for its 250,000 customers. Umpqua Bank now has the flexibility, scalability, availability, and cost-effectiveness that it needs to be innovative and competitive in the tough financial services market. Umpqua Bank expects to attract more customers and to double its online service usage to 40 percent within two years. It also expects maintenance costs to drop significantly due to consolidation of its online systems.

Situation

Umpqua Bank, headquartered in Roseburg, Oregon, provides a full range of financial services to businesses and consumers in western Washington, Oregon, and Northern California. Founded in 1953 in Roseburg to serve the timber industry, Umpqua Bank has grown steadily by acquiring other same-size banks. Today it is a U.S.$8.3-billion financial institution with more than 250,000 customers and more than 1,800 employees.

Community banks like Umpqua Bank may not have the national reach offered by larger institutions, so it is important that they find other ways to maintain a competitive edge. Umpqua Bank decided that its key competitive differentiator would be customer service.

While many other banks use their branches as high-volume transaction centers, Umpqua Bank refers to its branches as stores, and uses them to create an inviting retail experience that builds customer loyalty. Customers are encouraged to linger, nestle into a computer booth with free Internet service, listen to and buy music by local artists, and sip a cup of Umpqua Blend coffee. Tellers are called concierges and return deposit slips on a tray with a complimentary chocolate. Umpqua Bank has been recognized for its innovative customer experience and banking strategy by the Wall Street Journal, New York Times, BusinessWeek, and CNBC.

As the popularity of online banking heated up, Umpqua Bank was challenged to transfer its unique customer experience to the online environment. The Web has become an increasingly powerful channel for the banking industry, closely integrating the newer banking Web sites with the branch, call center, and mobile banking channels. Although many consumers still visit the branch environment, a distinct shift is underway, particularly among younger customers, toward broader digital access to basic banking services.

Umpqua Bank first introduced online banking services in 2000. However, as a result of a series of acquisitions, by 2007 it had five different online banking applications and three different online bill-paying applications. Although all were connected to the bank’s core banking system, each operated as an independent application, and each offered a slightly different set of online services. “With every acquisition, we acquired a new online banking system,” says Kathy Gebert, Vice President and e-Banking Product Manager in Product Strategies at Umpqua Bank. “It reached a point where we realized that we couldn’t continue to integrate diverse online systems. Our infrastructure became too complex, and the customer experience too fragmented and expensive to support.”

When customers called for support, the call-center staff spent a great deal of time figuring out which system the customer was using. Marketing and sales were also difficult; customers who opened accounts in California got one set of online services; in Oregon, another set. Umpqua Bank knew that the inefficiencies stemming from its disjointed online banking infrastructure were preventing it from growing its online channel.

Solution

Umpqua Bank issued a request for proposal (RFP) for a new online banking solution that could be implemented companywide. Umpqua Bank runs many business applications on the Windows Server® operating system and stores all its financial data in databases running Microsoft® SQL Server® data management software. The online solution would need to integrate easily and cost-effectively with those systems.

“One of our desires was that the new online solution run on a Microsoft foundation,” explains Molly McNealy, Senior Project Manager in the Technology Advancement Group at Umpqua Bank. “It was also critical that it provide the flexibility needed to change and grow the site as our business model changes and grows to meet future customer needs.”

Industry-Leading Solution

Six vendors responded to the RFP, and Umpqua Bank selected Voyager Consumer Banking from Fiserv, a leading global provider of financial services technology solutions. The Fiserv Electronic Banking Services division was formed through the combination of CheckFree and Corillian, which had been acquired by Fiserv in 2007. The bank’s relationship with Fiserv began in 1990, when it licensed the Premier core banking system. Umpqua Bank also used Fiserv

By migrating our online services to Voyager Consumer Banking running on Microsoft software, we expect to attract and retain more customers and better meet their evolving needs. John Baker Senior Vice President and Product Strategies Manager, Umpqua Bank

Voyager Consumer Banking and other value-added online banking services from Fiserv have been recognized in the industry for their innovation and ranked as the top online banking solutions in the market. They integrate hundreds of best practices to help financial institutions deliver an enhanced online banking experience that drives increased customer adoption, usage, and satisfaction. Fiserv online banking customers also have higher-than-average online banking penetration numbers and drive greater levels of online channel profitability. This innovation and leadership were key to Umpqua Bank selecting Voyager Consumer Banking as the foundation for its next-generation online banking services.

Using Voyager Consumer Banking, customers can perform a range of banking transactions online, including viewing account balances and history, making transfers, canceling checks, viewing check images, and accessing electronic statements. Customers can open accounts, pay bills, and manage personal and business finances.

Umpqua also chose the Family Banking and Personal Money Manager solutions from Fiserv to provide customers with the flexibility to manage accounts according to the needs of individual customers. Family Banking is a holistic financial management solution that enables users to securely grant access to family members, joint account holders, and third parties, to more effectively manage their finances. Personal Money Manager is an innovative personal financial management solution with enhanced transaction reporting and analysis capabilities. It also offers expanded online access to account history, online reporting, and tracking.

Rapid Migration

Fiserv worked with Umpqua Bank to migrate its five online banking applications to one system using the Voyager online banking platform, which powers the Voyager Consumer Banking solution. “The underlying Microsoft foundation in the Voyager platform helped us implement the new site quickly by enabling us to convert customer data from the older systems to the new system without interrupting the customer experience,” says Colin Eccles, Executive Vice President and Chief Information Officer at Umpqua Bank. “In one weekend, we converted 37,000 customers on one system to the new system without any problems.”

Fiserv offers four deployment options for its online banking solutions: Customers can license the software and run it on their premises, they can outsource the solution to Fiserv on an ASP basis, they can host the software in a Fiserv data center on shared servers, or they can host the software in a Fiserv data center on dedicated servers. Umpqua is using the fourth option, though the ability to bring the application in-house is an attractive option for lowering costs in the future.

New Online Services

The new Umpqua Bank online services went live in December 2008. Referring to the increasing popularity of Global Positioning Systems, the bank calls its services the “GPS of banking,” enabling customers to track the status and location of their money, check account balances, transfer funds between accounts, and pay bills online. With electronic billing, customers can have billers send e-bills directly to their Umpqua Bank account and make payments online to anyone, at any time, anywhere in the United States. They can set up single payments or repeating payments such as car payments or rent, or schedule future payments for up to a year in advance.

Using the Family Banking solution, customers can share account access with family members and give members different levels of control over accounts. The Personal Money Manager solution enables customers to quickly download account information to personal financial management software such as Microsoft Money, as well as categorize their transactions and monitor their spending, even if they don’t use personal money management software. Finally, customers can set up reminders and alerts, reorder checks, and request receipt of paperless statements.

New Staff Capabilities

The Umpqua Bank staff also has new capabilities with Fiserv’s innovative solutions. Using Campaign Manager, product strategies staff can use data gathered from customers’ online actions to build targeted marketing campaigns. For example, when a customer signs in, the banking software can determine whether the individual is using online bill-paying services and then display an ad to encourage enrollment in the CheckFree RXP service. Or, marketing staff can program the software to display an ad for Umpqua Bank mortgage lending services to any customer who is a homeowner but doesn’t have a real estate loan with the bank.

“The powerful tools within SQL Server are critical to the success of this cross-selling capability,” says Bob Homer, Vice President of Innovation/Experimentation and Marketing in Electronic Banking Services at Fiserv. “It performs real-time analysis of rules that the bank has created and pulls a wide range of customer data from multiple line-of-business systems, all while the customer is online. This provides a great opportunity for Umpqua Bank and other financial institutions to drive new product sales and enhance the online customer relationship.”

Relationship Manager is another employee-facing tool that helps Umpqua Bank staff support its online banking customers. If a customer is having trouble enrolling in online services or executing transactions online, Umpqua Bank support staff can use Relationship Manager to view the customer’s online actions and walk through the process with the customer.

Using the Report Manager tool, Umpqua Bank can run monthly or on-demand reports to summarize customer status, feature usage, and transaction totals. This tool is based on SQL Server Reporting Services. “We used Report Manager during the conversion process to monitor the success rate for customers attempting to sign in, so we could adjust our post-conversion support plan as needed,” Gebert says.

Powerful Foundation for Online Banking

Fiserv developed its Voyager platform and online banking solutions using Microsoft .NET Framework version 1.1 and the Microsoft Visual Studio® development system; the solutions at Umpqua Bank run on the SQL Server 2005 data management software and the Windows Server 2008 Enterprise operating system. “When we developed our online solutions, we knew that we could be successful with Microsoft software,” Shaw said. “As a partner and technology foundation, Microsoft has served us well. We gain the ultimate performance and scalability, and the latest development and performance tools. Through our success in meeting the online banking needs of some of the largest banks in the United States, Microsoft has been an ally in demonstrating the capabilities of Microsoft technology within the financial services industry. Some of the largest systems in the financial services industry are built on Microsoft software. In fact, approximately one of every three consumers who bank online is using Microsoft software.”

Fiserv online applications are integrated with the Premier from Fiserv core banking systems using Web services and a service-oriented architecture (SOA). “Leading financial institutions take a federated approach to application delivery, selecting different applications from different vendors that best suit the needs of each channel, function, or task,” says Mike Duesman, Senior Vice President and Chief Technology Officer in Bank Solutions at Fiserv. “Web services and SOA are critical to this strategy. Fiserv and Microsoft have long been strategic partners in using Web services to deliver innovative and industry-leading online financial services. Using the Microsoft .NET Framework and other Microsoft technologies enables Fiserv to simplify the implementation of online banking for our financial clients and provide new opportunities for channel integration.”

Benefits

By creating its new suite of online banking services using Fiserv Voyager Consumer Banking and other value-added services running on Microsoft software, Umpqua Bank was able to quickly update and expand its online platform. It now has a flexible, scalable Web foundation for representing the Umpqua Bank brand online and rolling out innovative new services. Within two years, Umpqua Bank expects to double online services usage, and reduce customer-support and maintenance costs.

Better Ability to Attract and Retain Customers

“By migrating our online services to Voyager Consumer Banking running on Microsoft software, we expect to attract and retain more customers and better meet their evolving needs,” says John Baker, Senior Vice President and Product Strategies Manager at Umpqua Bank. Umpqua Bank has set two-year goals to double penetration of its customer households that bank online to 40 percent, increase the percentage of online households that pay bills online from 19 to 38 percent, and realize a 32-percent increase in customer retention by offering online services.

The flexibility of the Fiserv products also helps increase the number of cross-sell opportunities and the profit-per-customer that Umpqua Bank derives through the online channel. “With Fiserv solutions, we can better customize the customer experience, offering different cross-sell options depending on which page the customer is on,” says Lani Hayward, Executive Vice President of Creative Strategies at Umpqua Bank. “As an example, for months, we had a link on our public Web page that enabled customers to open a new account. When we also placed the link on the home page of the online site, our sales of additional accounts to existing customers increased by 103 percent. This modification was easy to do with the Fiserv product. I’m anxious to see what we can accomplish by combining the Campaign Manager tool with targeted cross-selling.”

Reduced Costs

Umpqua Bank is using that same Fiserv and Microsoft technology set to reduce costs. Using Relationship Manager, the Umpqua Bank support staff can shorten customer-support sessions and give customers a more satisfactory support experience by speeding enrollment in various online services and resolving problems faster.

“Utilizing the Fiserv Premier SOA, we decreased the back-office enrollment process by approximately eight minutes per customer, and we average 123 new online banking enrollments a day,” says Jon Stockton, Assistant Vice President and Operations Manager for Retail Operations at Umpqua Bank. “That adds up to 16 staff hours a day or 1.5 full-time employees. Additionally, we anticipate that the call volume for minor support issues such as password resets will be reduced due to the new self-help features that are available. The reduction in call volume will enable our Customer Contact Center to be more readily available for other customer questions.”

Reduced Risk

Ray Gagnon, Vice President and Information Security Officer for Umpqua Bank, says that choosing Microsoft-based Fiserv solutions lowered the bank’s risk. “Microsoft implemented a number of security enhancements in Windows Server 2008 that greatly reduce the attack surface of the software. Microsoft solutions present fewer risks to Umpqua Bank in general, because our professionals are skilled in Microsoft software, and platform expertise can be just as important as technical enhancements when it comes to security. Secondarily, we are not driven to seek out alternative solutions and the associated training, because Microsoft continues to improve and enhance the security level of its products.”

Rapid Deployment

Even though the Umpqua Bank online implementation was far more complex than average, involving the phased migration of data from five online banking applications, it was accomplished relatively quickly, in just ten months. “Thanks to the familiar Microsoft foundation, the SOA architecture, and the Fiserv products already deployed at the bank, the implementation was streamlined and very efficient,” Shaw says. “This helped the bank get an improved set of online services to market as quickly as possible.”

Increased Innovation

Umpqua Bank now offers a rich, consistent set of online services that will help it be more competitive. “Even though we’re a community bank, we now have a set of online banking services that makes us very competitive with the biggest banks,” Baker says. “Plus, the Fiserv road map for future enhancements gives us a lot of confidence that we will be able to stay out front with our online services.”

Umpqua Bank was able to use the flexible Fiserv technology to brand its online site with the Umpqua Bank look and feel, with attention to detail as subtle but important to the bank as custom button design. “Some of our site design decisions might have seemed like hairsplitting, but it was important to us that every detail of our online site reflects the Umpqua Bank brand as much as possible,” Gebert says. “The Fiserv technology gave us the flexibility to invest that level of care.”

“The Microsoft foundation helps Fiserv add new functionality quickly and easily,” says Shaw from Fiserv. “Microsoft development tools are easy to use, and Microsoft-trained talent is of high value to us for the development of next-generation services. Using Web services makes it very easy to extend our solutions and integrate them with other banking systems that our customers are using.”

Although Umpqua Bank still hasn’t figured out how to offer visitors a cup of coffee while they bank online, it’s confident that its technology foundation will enable it to expand and customize its online services in a multitude of directions.
 
Microsoft Solutions for the Financial Services Industry
Financial institutions continue to seek cost-effective solutions that create rapid and sustainable competitive advantage while laying the groundwork for future innovation. Microsoft and its ever-growing partner community develop solutions that meet the industry-specific needs of banks, insurance companies, and capital markets firms worldwide, and help financial services customers realize their full potential.
 
For more information about Microsoft solutions for the financial services industry, go to:
www.microsoft.com/financialservices

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
www.microsoft.com

For more information about Fiserv products and services, call (800) 872-7882 or visit the Web site at:
www.fiserv.com

For more information about Umpqua Bank products and services, call (866) 486-7782 or visit the Web site at:
www.umpquabank.com