Computerworld - It's one of the West's fastest-growing savings and loans, with 119 branches in eight states and $7.4 billion in assets. Yet it owns no automated teller machines. It has no online banking. No voice mail. No "press 3" automated phone system. Typewriters still sit on desks at headquarters, and there are only five Internet-connected PCs.
So, how does this business survive?
Superbly, says Washington Federal Savings and Loan Association in Seattle, which last year reported record earnings of $144 million, a 27% increase over fiscal 2001. At a time when critics are questioning the value of IT, Washington Federal seems to be proving those contrarians right: Less is more.
Washington Federal keeps its technology spending down to 1% of its annual operating expenses and has a 1980s-style IT department of seven.
"We say, 'Don't spend a dollar when a dime will do,'" says Roy M. Whitehead, president and CEO.
Whitehead boasts that Washington Federal has the best efficiency ratio in the thrift industry: 18%, compared with the industry average of 45%. That means that while other thrifts spend 45 cents to produce $1 of net revenue, Washington Federal spends 18 cents (including the 1 cent for IT) to earn a buck.
"We measure any investmentwhether in people, in brick and mortar, or technologyrelative to the impact it will have on our efficiency ratio," says Whitehead.
One reason Washington Federal can spend so little on IT is that it has a simple, low-tech collection of services: passbook savings, certificates of deposit, money market accounts, interest-bearing checking accounts and fixed-rate home mortgages.
"We use technology when it allows us to deliver a higher level of customer service more profitably," Whitehead says. "However, our customer base is one that is older and probably longing for 'high-touch' levels of service that they can't get at other institutions, which seem focused on delivering product at the lowest per-unit transaction cost."
So Washington Federal employees answer their own phones. And if they don't use typewriters, they use the WordPad applet that comes free with Microsoft Windows 98. The company's Web site provides customer and investor information, with a single e-mail contact for inquiries.
"The whole concept of not having a high-tech environment isn't particularly new, but it seems [Washington Federal has] raised it to an art form," says Jerry Silva, an analyst at Needham, Mass.-based TowerGroup.
So, what does Washington Federal's IT chief think of this low-tech operation? "You really have to let go of anything that's 'cool' or 'gee whiz' or 'would this be great,' " says Terry O. Permenter, manager of information systems. "And you have to say, 'What really makes sense for the bottom line?' Sometimes that's frustrating, because that 'cool, gee-whiz' stuff is pretty fun. The discipline of our business model is pretty powerful." Permenter started working at the thrift as a programmer 21 years ago. "I am very proud of Washington Federal," he says. "We are so off-the-chart that people have a hard time believing it."
Crafty hackers hack craft stores -- again.
Michaels Stores (NYSE:MIK) has finally confirmed the details of the point-of-sale hack revealed in January. It's unclear what's taken them so long -- the company claims the hack was "highly sophisticated," but everyone uses a blah-blah phrase like that.
Your humble blogwatcher notes that the problem persisted for more than a month after the news first broke. smh.
In IT Blogwatch, bloggers are aghast that, for the second time, the company's POS was hacked -- lasting almost nine months.
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- The Big Data Opportunity for HR and Finance
- If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- Manufacturing Outlook: Improving time to market, operational effectiveness and innovation in a highly competitive environment
- An enterprise project portfolio management solution can help manufacturers position themselves in the new competitive landscape.
- Time-to-Market: The Need for Speed in the Automotive Industry
- Bringing new vehicles to market quickly has never been more challenging. To bring new models to market on-time and on budget, automakers need...
- Application Rationalization Scorecard: Analysis to Action
- This paper details a proven method, used most recently to evaluate a financial services application portfolio. At the method's core is the scorecard....
- Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
- This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
All Financial IT White Papers
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- On-demand webinar: "Mobility Mayhem: Balancing BYOD with Enterprise Security" Check out this on-demand webinar to hear Sophos senior security expert John Shier deep dive into how BYOD impacts your enterprise security strategy...
- Mobile Security: Containerizing Enterprise Data In this on-demand webinar, Fixmo's Lee Cocking, VP of corporate strategy, explains why Apple-ization trends like mobility and "bring-your-own-device" (BYOD) are driving the...
- Endpoint Data Management: Protecting the Perimeter of the Internet of Things Not surprisingly, "Internet of Things" (IoT) and Big Data present new challenges AND opportunities for enterprise IT. Teams need to harness, secure and...
- All Financial IT Webcasts