SERVE: A Framework for Reducing Your Cost to Serve

Why the Cost to Serve matters

In an increasingly competitive financial landscape, member-owned financial institutions – including Credit Unions, Community Banks and Building Societies – face mounting pressure to deliver exceptional member service while controlling operational costs. These institutions, built on principles of member ownership and community-first banking, must strike a delicate balance between modernising services and maintaining the trust and personal relationships that set them apart from mainstream banks.

The challenge: Reducing the cost to serve while enhancing the member experience.

Member-owned financial institutions have a fundamentally different business model from shareholder-driven banks. They reinvest profits into better services, lower fees, and community development rather than distributing dividends to investors. However, this member-centric approach also means that operational inefficiencies directly impact the institution’s ability to serve its members effectively.

Key challenges include:

• High operational costs due to legacy systems and manual processes.
• Rising regulatory compliance costs in an evolving financial landscape.
• Increasing expectations for digital services from members, particularly younger generations.

To remain competitive and financially sustainable, member owned banks must adopt smarter, technology-driven approaches while maintaining their customer-first ethos.

SERVE Framework

This is where we believe our SERVE framework comes in – a strategic approach designed to help banks navigate these competing priorities. SERVE stands for:

• S – Service: More than just marketing.
• E – Experience: The importance of a seamless digital member experience.
• R – Regulations: Managing compliance efficiently in a global banking environment.
• V – Value: Demonstrating ROI and delivering measurable proof points.
• E – Efficiency: Digitising and automating to remove manual processes.

This blog post introduces the SERVE model, outlining how mutual financial institutions across key markets can apply it to cut costs, improve efficiency, and drive sustainable growth.

S is for Service

For many financial institutions, “service” is often mistaken for marketing campaigns and customer acquisition efforts. However, true service in banking goes far beyond selling products – it’s about delivering value to customers at every touchpoint.

How To Deliver Better Service at Lower Costs:

1. Self-Service Options: A well-designed customer portal or automated journey can reduce call centre volumes and free up frontline staff to better serve the customers that need more personal assistance.
2. Proactive Support through Data & Automation: By combining data from core systems with insights from digital journeys, banks can identify customers who may need more support, and automatically deliver proactive, personalised solutions.
3. Member Education & Financial Wellbeing: Credit unions and mutual banks can enhance financial wellbeing by providing digital financial education tools, empowering members to make better financial decisions while reducing the strain on customer service teams.

E is for Experience

The way members interact with their financial institutions is evolving rapidly. A frictionless, intuitive digital experience is no longer a luxury but an expectation for banks worldwide. However, the good news is that “Going Digital” can also be a cost-reduction strategy. When members can complete their banking needs quickly and independently, the institution saves money on staffing, call centre resources, and manual processing.

Key Areas for Optimising Digital Experience:

1. Seamless Onboarding & Account Opening: Digital document collection and automated onboarding streamline account setup, reducing paperwork and administrative costs while improving efficiency.
2. Integrated Omnichannel Banking: Ensuring a consistent, seamless experience across web, mobile, and in-branch services minimises operational inefficiencies and reduces the need for costly back-end reconciliation.
3. Smart Self-Service Features: Empowering members with digital tools for onboarding, credit control, and complaints management lowers reliance on live support, freeing up staff for more complex interactions.

R is for Regulations

Managing compliance efficiently has become a critical requirement in a global banking environment. Regulatory requirements may differ slightly across jurisdictions, but the burden of compliance is universal. Credit unions and community banks must navigate evolving financial regulations, consumer protection laws, and cybersecurity standards while keeping costs in check.

However, the right technology can actually help mutuals manage compliance efficiently, reducing manual workload and associated costs.

Key Factors for Managing Regulatory Compliance:

1. Streamlining Regulatory Communications: Compliance-related member communications, such as privacy updates, arrears notices, and policy changes, can be digitised and automated, significantly reducing print and postage costs.
2. Enhancing Information Security & Data Protection: Banks must meet strict regulatory requirements such as GDPR in Europe and digital platforms can improve audit trails, secure communications, and consent management, ensuring compliance with minimal administrative effort.
3. Ensuring Digital Resilience: Cloud based solutions can help mutuals comply with emerging resilience and cybersecurity standards such as DORA in Europe and CPS-230 in Australia, ensuring operational continuity while reducing the costs of manual oversight.

V is for Value

When investing in technology or process improvements, financial institutions must be able to demonstrate clear returns on investment (ROI) to justify costs and secure stakeholder buy-in.

Key proof points are required in relation to cost savings, efficiency gains, and member satisfaction. This means tracking KPIs to demonstrate tangible value such as reductions in operational costs, time saved on key manual processes and workflows, and call centre efficiency.

Key Metrics for Measuring Value:

1. Operational Efficiency Gains – Measured by reductions in manual processing time, faster approval times for loans or payments, and lower back-office overhead. For example, automating direct debit sign-ups and digital document collection can significantly reduce administrative burdens and speed up onboarding.
2. Member Retention & Satisfaction – Metrics such as lower churn rates, increased engagement with digital channels, and improved Net Promoter Scores (NPS) demonstrate how well a mutual institution is serving its members. Enhancements like personalised member communications and proactive service notifications can improve satisfaction while reducing costly service interactions.
3. Cost Savings Through Automation – Direct reductions in call centre costs, postage, printing, and manual workflows. Moving to e-billing, e-statements, and automated payment reminders not only lowers operational costs but also accelerates cash flow and enhances compliance by ensuring timely communications.

By consistently tracking these performance indicators, mutuals can clearly demonstrate the financial and strategic value of digital transformation, reinforcing the case for further investment in automation and process optimisation.

E is for Efficiency

Significant benefits can be achieved by digitising and automating manual processes across all five stages of the customer lifecycle, from Acquisition to Retention.

Many financial institutions still rely on manual, paper-based workflows that slow operations, increase costs, and limit scalability. By embracing digitisation, automated decision-making, and cloud-based solutions, mutual banks can reduce inefficiencies, streamline processes, and allocate resources more effectively.

How To Drive Efficiency Cross the Customer Lifecycle:

1. Acquisition – Digital Engagement & Lead Nurturing: Automating customer acquisition processes, including lead nurturing and product cross-sell, ensures targeted, cost-effective marketing while improving conversion rates.
2. Onboarding – Seamless Digital Journeys: Online onboarding, direct debit sign-up, ID verification, and consent collection reduce paperwork and manual processing, expediting member activation.
3. Credit Control – Streamlined Payment Management: Digital credit control solutions such as e-billing, e-statements, automated payment reminders, and digital collections lower administrative costs and improve payment rates.
4. Servicing – Automating Key Member Interactions: Mutuals can reduce manual workload by digitising complaint management, bereavement processes, regulatory notifications, and document uploads, ensuring compliance while enhancing the member experience.
5. Retention – Proactive Member Engagement: Automated rewards campaigns, customer surveys, and dormant account reactivation help sustain long-term member relationships and reduce churn.

By strategically digitising each stage of the customer lifecycle, mutual financial institutions can significantly reduce their cost to serve while maintaining high-quality member interactions.

Digitising the Customer Lifecycle

Click on each section of the Lifecycle Graphic to see examples of the workflows and
processes that we have digitised and automated for banks and credit unions.

5 Stages of Customer Lifecycle

Acquisition

• Customer Acquisition
• Lead Nurturing
• Loan Book Growth
• Product Cross-Sell
• Promotions
• Re-engagement

Onboarding

• Welcome Journeys
• Onboarding
• Direct Debit Sign-up
• Consent Collection
• ID&V
• Document Collection

Credit Control

• Collection & Recoveries
• Rayment Arrangements
• Digital Payments
• E-Billing
• E-Statements
• Payment Reminders

Customer Servicing

• Bereavement
• Vulnerable Customers
• Complaint Management
• Document Upload
• Letter Digitisation
• Regulatory Notifications

Retention & Growth

• Rewards Campaigns
• Newsletters
• Customer Surveys
• Loan Expiry
• Dormant Accounts
• Upsell/Cross-Sell

Conclusion: The Future of SERVE

The member-owned banking sector faces unique pressures – but also unique opportunities. By embracing the SERVE framework, institutions can effectively reduce their cost to serve, improve efficiency, and enhance member experiences.

As we continue this blog series, we’ll explore each component of SERVE in greater depth, providing real-world insights and actionable strategies for mutual banks worldwide. Stay tuned for the next post: “S is for Service – More Than Just Marketing.”