PenFed expands chatbot strategy via Salesforce platform

The credit union, one of the nation's largest, is using the Salesforce platform to deploy chatbots that can handle a growing set of customer-facing tasks as well as in-house uses.

PenFed Credit Union is expanding its rollout of chatbots -- and their integration with robotic process automation -- as the financial institution looks to build upon its Salesforce platform.

PenFed, headquartered in Tysons, Va., ranks among the largest credit unions in the U.S., with assets of $35 billion. The nationwide credit union has nearly 3 million members. Many of them come through PenFed's digital channels. That's where chatbots enter the picture.

The organization's use of chatbots, based on Salesforce technology, began in the months before the COVID-19 pandemic. The original implementation was with PenFed's IT service desk, where a chatbot, integrated with UiPath's RPA software, automates tasks such as password resets. In 2021, PenFed began deploying chatbots to help its members with technical issues, providing financial product information and updating the status of loan applications.

The rollout has been incremental, reducing the risk of digital transformation, noted Joseph Thomas, PenFed's CIO. "One of the advantages of this platform approach is that we could actually trial capabilities before we unleash it on our members." He said Salesforce's Audience Targeting feature facilitates the stepwise deployment of chatbots and other member-facing functions.

Chatbot tech for new members

The member-facing chatbot conducts 40,000 sessions per month, while the in-house service desk bot takes on about 25% of employees' service requests. PenFed, however, aims to extend the reach of chatbots higher up the sales funnel.

Joseph ThomasJoseph Thomas

"We're starting to use the chatbot on the acquisition channel, which is where we see a lot of new members coming through," Thomas said. "New members drive more calls."

Indeed, members new to PenFed tend to need more help with issues such as changing billing dates or finding the appropriate credit union resources. And the volume of new members is growing, with PenFed's loan-to-share ratio, which looks at a credit union's outstanding loans as a percentage of members' deposits, helping fuel that increase.

PenFed ended 2021 with a 103% loan-to-share ratio, which includes a chunk of the credit union's long-term capital as well as members' share deposits. Maintaining that ratio for the entirety of 2022 would let PenFed approve 125,000 new auto loans or 10,000 new mortgages, according to the credit union. The average loan-to-share ratio for U.S. credit unions was 70.2% in the fourth quarter of 2021, according to market research firm Statista. To the extent PenFed's higher ratio drives more customer business, the credit union can generate more earnings from outstanding loans. The business cycle leads back to IT: Extra earnings, coupled with loan sales to other credit unions, let PenFed reinvest in technology, the company noted.

PenFed's member-assisting chatbot technology, meanwhile, may include RPA integration, building on expertise PenFed gained from deploying RPA bots on its IT service desk. The credit union plans to augment its use of UiPath with the process automation features expected to surface in the summer release of Salesforce Financial Services Cloud.

"I think it'll be a combination of what we've been doing with UiPath and then leveraging some of the new features in the summer release," Thomas said.

Platform thinking

PenFed's chatbot rollout is representative of the credit union's platform approach to IT. A platform such as Salesforce continually evolves to provide additional features -- such as chatbots and process automation -- that organizations would otherwise have to acquire and support.

"That's why you have to go with a platform, and invest once in the platform, because the platform is always going to be delivering capabilities," Thomas said. "You want to be leveraging the capabilities of the platform, rather than creating custom legacy capabilities that you're going to have to own and maintain."

You want to be leveraging the capabilities of the platform, rather than creating custom legacy capabilities that you're going to have to own and maintain.
Joseph ThomasCIO, PenFed

PenFed in late 2018 committed to Salesforce, tapping Salesforce Financial Services Cloud as its omnichannel digital banking platform. Other key components include Salesforce Experience Cloud and the SaaS company's MuleSoft integration platform.

Thomas credited this platform strategy with helping PenFed meet its IT needs, following its 80/20 rule: get 80% of the value at 20% of the cost. PenFed is considerably larger than the bulk of credit unions, most of which have under $500 million in assets, but it operates with an IT budget a fraction of megabanks such as JPMorgan Chase, which manages $3.95 trillion in assets.

As a result, PenFed needs more technology than SaaS vendors targeting smaller credit units can provide but lacks the IT budget for custom development.

"Our members wouldn't be served by the package solutions that thousands of little guys get, and we can't afford to build," Thomas said. "Where you end up is a strategy around what we call platform thinking."

The platform method offers "a lot of capability" along with ongoing updates, Thomas said. Platforms also open an opportunity for low-code/no-code technology, composable applications and reusable components. And then there's the broader partner ecosystem. PenFed's Salesforce platform extends its reach through integrations with UiPath, FIS Global's teller platform, Genesys' telephony offering and Ping Identity for two-factor authentication.

PenFed's platform thinking

Here's PenFed's IT approach, at a glance:

Technology: Salesforce Financial Services Cloud, Experience Cloud, MuleSoft

Functions: Omnichannel digital banking, IT service desk and customer service chatbots, financial management tools, RPA

Integrations: FIS Global, Genesys, Ping, UiPath

Benefits: Out-of-the-box functionality, continuously evolving features, lower cost than custom coding

Key metrics: Agility; IT as percentage of G&A and revenue; control over technical diversity

What's next: Chatbot implementation for acquisition channel and new members

Measuring returns: Agility counts

Measuring the return on a platform investment becomes a bit tricky, Thomas said. "I've seen companies spend a lot of time and effort trying to prove return on investment and what they end up doing is they become master storytellers," he noted.

Thomas questioned how an organization can draw a straight line from a given project to its effect on revenue. Instead, he considers agility a core measure, using what he termed an 8-8-8 approach. That is, what features can the IT shop provide in eight weeks, eight days or eight hours?

"How many of my efforts can I deliver within eight weeks or, if it's configurable, can it be eight hours or, if it's a small tweak of a reusable component, can it be eight days?" Thomas said.

He cited chatbots as examples of rapid delivery: The IT service desk bot went live in eight days, and the member-facing chatbot took eight weeks to deploy.

Thomas called agility a micro measure in contrast to macro-level measures he uses. The latter includes IT spending as a percentage of general and administrative expenses and as a percentage of revenue. He also pointed to the ability to control "technical diversity" through the platform and adjacent offerings such as Ping and UiPath, avoiding redundant products and keeping IT expenditures in line.

"That might seem like a very non-McKinsey kind of approach to value," he said. "But it serves us well."

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