DALLAS – Put money directly into the day care center's checking account. Transfer money from your credit union to your son's bank account near the college he's attending more than 1,000 miles away. Transactions like these are becoming more common as financial institutions and vendors work to tear down traditional barriers to online money movement. Advancial Federal Credit Union here offers one example. In July this year ACU beefed up its online services by adding inter-institution transfer and person-to-person technologies through CashEdge. Brent Sheffield, AFCU's COO, says the move was incorporated into the credit union's business plan more than a year ago in response to member requests. "We wanted an ACH-type application, and in looking at the market we felt the CashEdge product would help us achieve most of our objectives," Sheffield says. CashEdge explained what they were doing through Yahoo. AFCU saw that as a good starting point, but felt transfers took a little longer than members wanted. So the credit union worked with CashEdge to change the workflow. "It took a little while," Sheffield explains. "We've been working through some of the details to make sure it's going to work smoothly. We don't have a full launch yet, but we have trademarked a name – itransfer. We're going to integrate that brand within our home banking. We have high hopes for a larger scale, long-term plan to market it aggressively." The approach includes safeguards to make certain the user has legitimate access to both accounts. Establishing valid access speeds the process and makes it cost-effective for the credit union on a long-term basis. As AFCU reviewed approaches to online money movement, Sheffield was surprised to find there weren't as many options as he originally expected. "We automate a lot of things at this credit union. We're over half a billion dollars in assets, we have 12 branches, and we have less than 100 employees. We operate very efficiently, and we didn't want to add two or three employees to manage this one add-on product," he explains. "Where we're at now is probably not the resting place. We're taking the first step. It will likely develop to the point more of your transactions, such as your home banking and your debit card, are integrated into one overall flow. Right now they're kind of separated, and you have different vendors. I think more of that is going to be centralized." CashEdge CEO Sanjeev Dheer describes inter-institution money movement as a very critical part of online channels, especially for credit unions and community banks. By making it easy for online members or customers to move money between accounts at different institutions, the smaller institution can become the central account and level the playing field. A member can maintain a credit union account even though the credit union doesn't have the physical footprint of larger institutions. Yes, there are some challenges, such as integrating with other providers who typically provide back-office functions. Dheer indicates CashEdge, for example, can handle that. "In our view, online money movement represents the sharp edge of the wedge. It is the first breakthrough into a new way of doing payments. Once that starts to get more widely implemented, it will become more and more sophisticated and embedded into the fabric of online banking," he says. That growing sophistication can include establishing transfers by date or balance levels. It may also offer different settlement times, so similar to selecting the delivery time on a Federal Express package, the user will decide whether a transfer should be made immediately or perhaps within three days. Earlier this year, Wescom Credit Union in Pasadena, Calif., launched Wescom Integrated Data Systems, a joint venture between the credit union and Integrated Data Systems. One of the products Wescom and IDS have already worked on during the past couple years is member-directed transfer of funds through the ACH. That became available to members in December 2000. Darren Williams, WCU president/CEO, says much as the credit union wants to become each member's primary financial institution, and although the PFI numbers are very high, even those members who consider WCU their PFI maintain relationships with a broker, a bank or another credit union. "Rather than have them conducting business using those other institutions' platforms or delivery channels, we want to drive them to Wescom," Williams says. Are members responding? Brian Siegel, Wescom vp/ecommerce, says volume ramped up quickly even though the service wasn't heavily promoted. Last year the credit union handled $18.2 million in some 23,000 individual transactions through the ACH on the home banking platform. He expects that pace to double this year. Even so, Siegel adds, "It is a fairly new program with a certain amount of unknown risk. One of the biggest challenges I've found as I've talked to other financial institutions about it is they need to be willing to try something that really hasn't been done on an extensive basis up to this point." You also have to consider how you communicate it to members, Williams says. All consumers who use some form of home banking know they can transfer money from checking to savings and so on. But they've also learned they couldn't shift funds from one institution to another. So it's hard for them to realize how powerful this new application is. His advice to other credit unions is simple – do it. "You've got to innovate for the member," Williams says. "A standard home banking application which you can get anywhere is not going to differentiate you." -

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