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Electronic Transactions Take Root and Grow
in Rural Illinois
Mary Ellen Thomason, BankNews
May, 2004
Fairfield is a rural, conservative community of 5,400 located in Wayne County, Ill. The nearest city, Evansdale, Ind., is 50 miles to the east. Thirty-one percent of the county’s population is over age 55; 80 percent of the residents own their homes. Median income is $30,481. There are 24 people per square mile, 90 percent less than the total for Illinois. Industries are agriculture, mining and oil. And nestled in this southeastern Illinois community is the 100-year old Fairfield National, with nearly $238 million in assets and two offices.
Fairfield is an unlikely place for electronic banking to take root and grow. And yet more than half of the employees at Fairfield National conduct more than 90 percent of their transactions electronically. The entire staff is signed up for e-mail statements. Two employees haven’t written a check since November 2002.
In November 2000 President and CEO Larry Rost looked at the future of banking, decided it wasn't paper and launched a campaign to promote electronic transactions among his bank staff. He knew that employee use of electronic banking would be the first step in selling its cost-effective convenience to Fairfield National’s customer base.
"I’d spent two or three years ‘stump speaking’ trying to get my employees to use electronic methods," Rost explains. In spite of that, by November 2002, employees were conducting only 40 percent of their transactions electronically.
The bank president decided a more aggressive approach was needed. He took a baseline reading of the employees’ accounts after statements were cut to determine how many transactions were completed electronically. Included in his baseline were debit cards, e-mail statements, bill payment, Internet banking (including transfers between accounts), ACH debits and credits and ATM cash withdrawals. He developed a "report back" mechanism and began providing the statistics to the employees each month.
He also set up a reward system, grouping employees by 100 percent, 90 percent, 80 percent, etc. "It was like getting a report card from school," Rost laughs. "If their electronic transactions fell below 60 percent, they failed."
The report’s real purpose was to encourage competition among employees. It worked. By the end of the first quarter 2003, employees’ electronic transactions had climbed to 72 percent of all transactions. There were incentives along the way. Employees were doing so well at the end of the first quarter of competition that the bank gave away "financial candy." Rost explains that although the cash giveaway was small, it recognized employees who made the effort to transition to electronic transactions. More "financial candy" was handed out at the end of September 2003.
But the driving force behind the competition was the report that Rost distributed each month. Names of the employees continued to be grouped by their electronic transaction performance. By the end of 2003, employees were conducting 86 percent of their transactions electronically; by the end of February 2004, employee transactions had reached the 88 percent level.
As expected, employees’ hands-on knowledge of electronic transactions has spilled over into the customer base. Today, 18 percent of Fairfield National’s customers are performing transactions electronically, and the number is growing by about 3 percent per year.
"We are a rural, conservative community," Rost explains. "That makes it very important to have an employee base that is experienced in electronic transactions so they can help the community adapt to the electron methodology."
That assistance extends to Check 21. Rost has recently made Check 21 presentations to a number of civic organizations to prepare residents for this far-reaching change to the nation’s payment system. "We are taking the position that Check 21 is needed to modernize the banking industry," Rost explains, "and letting area residents know that instead of moving paper checks all around the United State, we will be able to take advantage of electronic transmissions."
Rost says the bank feels fortunate to have moved to check imaging in May 2003. "That was a giant leap forward."
Check imaging also affected competition among bank employees. "As soon as we moved to imaging, 100 percent of our employees began receiving statements by e-mail." Fairfield National also promotes e-mail statements on the home page of its Web site www.fairfieldnb.com - and says that although this transition is a "slow train," once customers begin receiving email statements, they love them.
Rost is amazed by how quickly employees made the transition from paper to electronic transactions, taking only a year to get electronic transactions in full swing, and he has some advice for bankers who want to launch a campaign to move employees and eventually customers from paper to electronic. "Get some competition going," Rost says. "Make it fun. Provide plenty of feedback. Our competition is so fierce that it irks many employees when they have to write a check."
Employees are a bank’s greatest asset in the transition, Rost believes. "And if you don’t have some incentive to bring all your employees onboard, it’s pretty hard to convert communities. The employees become facilitators as they meet and work with our customers, and they are performing at a very high level."
Rost has no doubt that electronic transactions are the wave of the future. "Conducting transactions electronically is the way banking is going to go because this is America: Americans have always gone for faster, more efficient and cheaper."
"As for Fairfield National," says Rost, "we’re just country folks attempting to manage in a new environment."
