Investing In The Future Of Convergence

Financial institutions know all about bottom-line incentives. Voice and data network convergence provides one such incentive for banks and credit unions to save sizable dollars while enhancing their call center functionality.

As Seen in March 2005 Internet Telephony         By Lynda Treanor

Voice system manufacturers such as Avaya, Nortel, NEC, and Mitel have now stopped all Research and Development on traditional telephone systems and are instead focusing exclusively on architecting converged platforms. And they will stop supporting traditional voice systems altogether by 2007. In other words, they are 'end-of lifing' current systems to make way for the new Internet telephony convergence platforms. Leaders in the financial services arena are looking at these industry drivers and realizing there is a near-term urgency for business decision-makers such as themselves to ponder their tech convergence options and plan accordingly.

In 2004, the voice systems market traveled beyond the early-adapter phase of these new technologies and segued into the 'fast follower' stage. Knowing that this stage is the optimal time to employ best practice strategies, Affinity Plus Federal Credit Union (APFCU) recently created a significant ROI by embracing the convergence process.

"The primary goal of this project was to enhance the performance of our Member Relations by extending call center functionality to all APFCU locations," states Keith Malbrue, Chief Information Officer of Affinity Plus. "We realized that an enterprise-wide call center solution would provide better utilization of our employees as well as overall better service to Credit Union members. In addition, converging our voice and data networks would give us greater efficiencies and cost savings."

The largest credit union in Minnesota in terms of revenues, Affinity Plus recently converged its 20 locations into a centralized model with advance featuring that now accommodates 275 agents versus the previous 35. This extended skills-based contact center provides routing alternatives that have enhanced customer service and reduced hold times. Customer inquiries are not only answered quicker, call distribution is more evenly managed and voice mail capabilities are centralized. The model also utilizes subservient server gateways at remote locations for survivability and strengthened disaster recovery capabilities. The overall design of the new system enables Affinity to sustain higher employee retention rates and to better understand staffing needs.

"Our move from traditional TDM to IP PBX and contact center has benefited us by enhancing our agent productivity" says Brad Wampole, Affinity's Director of IT. "More streamlined workforce management has resulted from our skills-based call routing. Management of the system is easier since we've reduced our number of vendors from six to two. There are fewer bills to review on the accounting side; service issues are more easily resolved; and maintenance costs are no longer a major factor. Overall, we feel that we now have a notable competitive advantage over the other major credit unions in our region."

The financial industry as a whole grapples with high employee turnover rates, redundant training issues, and long customer hold times. Affinity Plus had to deal with the same concerns. These were the fundamental reasons that prompted them to take action on convergence. Other factors included:

With their old system, 13 of the Affinity Plus offices had been using archaic analog systems. In the new model, high-end IP telephones have replaced the old analog phones in these outstate branches. In the metro Twin Cities, duplicate point-to-point T1s have been eliminated, with voice and data networks converged on a single T1. At headquarters, centralized call processing is the hub of the wheel, with redundancy features for additional survivability. Utilizing existing staff at remote sites offers ideal flexibility for call center staffing. Skills-based routing allows calls to be directly routed to the correct resource to better handle customers' needs.

Moving away from Frame Relay allowed Affinity to be more confident in WAN routing time-sensitive traffic. Affinity was not required to change or add staff to support this new solution. The centralized and Web-based system administration gives their existing employees better accessibility and visibility into remote sites.

The Metro branches did not see many technology changes, although Unified Messaging and additional redundancy are key benefits to these branches.

Service capabilities at the remote branches have been measurably improved. The ability to have a higher speed connection for data heightens the productivity of existing users. Providing direct inward dial, multi-line phones with voice mail, unified messaging and branch-to-branch free calling — as well as other notable features — has enhanced the overall customer experience.

"Customers are demanding that converged systems have the same features and reliability of traditional systems.

Making a change to a converged solution is based on current business drivers, technology opportunities and cost savings," says Nortel's Director, Paul Thieken.

Multi-site financial service organizations dependent on customer contact centers at the heart of their business are implementing convergence strategies primarily because of this improved agent productivity.

"The efficiency of such call centers can be greatly improved on IP platforms," notes Scott Strand, a telecommunications consultant with N'compass, Inc. "Greater flexibility in servicing customer calls is a defining benefit of converged voice. This is compelling more and more companies to consider their convergence options. In fact, telecommunications experts expect over one million such call center agents will be using IP platforms in the U.S. by 2007."

Several primary organizational barriers set up blocks for many financial groups — as well as other businesses — from moving forward with convergence implementations. Voice and network work teams — sometimes known as 'the cats and dogs' — have until recently typically operated with silo mindsets in different departments. They lived in entirely different camps and communication was terse at best. Now they are being integrated and forced to work together — like it or not — and are often managed by one CIO. Networks originally built to provide access to common-area stored files now need to also provide support for voice, video, and security demands. Just a few years back, interruptions to Internet connectivity were commonplace, but now no outage is acceptable. The exhortation Always On! demonstrates how expectations have changed and why leadingedge financial institutions are moving past all such delay-causing barriers.

Many banks and credit unions postpone IP telephony implementations because of initial bottom-line concerns. The cost to upgrade a traditional voice system usually averaged 50-60 percent of the cost of the original platform. While it is true that the cost-to-build dollars for an initial IP installation are higher, the cost-to-provide-services figures are substantially lower.

Affinity Plus figured that the cost to upgrade their voice network would come to 120 percent of the cost of a new system. But after the cost of new technology was factored in, the credit union will save $1.5M over five years because of their system replacement. Connectivity via a wide-area network has eliminated long-distance fees between branches. And of course service contracts and maintenance fees are significantly lower.

"Affinity Plus had been looking for a solution to improve their customer experience...this convergence solution did exactly that and more. A virtual call center offers extreme flexibility in making sure that each customer call is answered as quickly as possible and by an agent who has the skills to help the customer independent of the agent's location. In addition, Affinity's overall disaster recovery capability was greatly enhanced," sums up Mike Cline of Cisco Systems.

Overall, the infrastructure savings at this statewide credit union are more than paying for the upgrade to their new IP PBX and phone systems.

"We did need to upgrade our network to be prepared for IP telephones," points out Keith Malbrue. "But the overhaul was well worth it when we saw that our Credit Union members benefited, our employees benefited and our organization benefited. Such a win-win-win equation is hard to beat."

According to Keith Meierhofer of N'compass, there are myriad business benefits to be had from IP convergence. Some primary questions to consider when assessing how soon to embrace the process include:

The decision by voice system manufacturers to no longer invest R&D dollars in their traditional systems isn't just a minor change in course for 2005. It's a major transition, even a tectonic shift. We are fast approaching a technology tipping point when video, voice, and data convergence will be the rule, no longer the exception.

This move towards convergence can in fact be compared to other notable industry accelerations such as the change-over from propeller engines to jets. Affinity Plus Federal Credit Union is one financial services example of why it makes bottom-line sense to invest inthe future by analyzing your IP convergence options now.

Lynda Treanor is a senior technology consultant at N'compass, Inc., a consulting firm specializing in telecommunications and technology systems design, maintenance solution services, and optimization.

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