3 MARCH 1993: ACUHC/BD: RICHARD RAXWORTHY TALKING TO BRIAN DEAN AT AN AUSTRALIAN INSTITUTE OF CREDIT UNION MANAGERS’ CONFERENCE

I will ask Mr Dean, where were you born and when?

BD:      In Geraldton in Western Australia in 1943.

Did you grow up around there?

BD:      Throughout country towns in Western Australia.

What sort of influence from your parents and your young life?

BD:      Well my father was a bank manager and that entailed regular transfers. It was fairly unstable in terms of schools and friends and acquaintances. But generally very high in moral values and community values.

What sort of schools did you go to?

BD:      Oh just State schools in Western Australia?

Did you do any good?

BD:      Absolutely.

Now when you left school did you get any tertiary education or did you go straight to work.

BD:      No, I did my Leaving, as it was known then, then went straight into the banking industry.

How long did you work in the banking industry?

BD:      Seventeen years. The last eight of which were as Data Processing Manager for the A&I Bank in Western Australia. In 1977 we formed GCS with two partners.

Who were?

BD:      Andrew Phelan and Nigel Gallop, both of whom are still with me and we still operate GCS and a US operation together.

When did you start becoming interested in the credit union industry as a possible user of your services?

BD:      Well in the few years prior to 1977 there were a number of credit unions in Western Australia who were using an antiquated batch system that Andy and Nigel were involved in. Of course I was involved in systems development in the banking industry in general. There was an obvious market there for a decent real-time service-orientated system. So in 1977 we spoke to the CSA Credit Union in Perth and they agreed that they needed to update the services they provided. They agreed to do some of the initial funding of the development work. So we started that on April Fool’s Day in 1977. We spent the rest of that year doing the primary development work. The first two installations in fact were completed in November 1977 and January 1978.

Who was the second one then?

BD:      In actual fact CSA was the second. The first one was Knox Premier Building Society in Victoria.

So who was it who spread it to the other States? Was it yourself, or others looking?

BD:      As soon as we started to work it was very apparent that there was a high latent demand for such a system and it created a lot of interest right around the country, as soon as we started. That interest came both from the building society movement and the credit union movement. I guess in those first few years we did as much building society business as we did credit unions. Of thirty-one operating building societies in Australia we still provide retail banking services for twenty-two of them, which is a high percentage.

What about the spread to Victoria and New South Wales, how did that happen?

BD:      Well we were all based in Perth for the first three years of the business, but we spent so much time on aeroplanes trying to service the Eastern States that in 1980 I decided I would relocate to Melbourne. We started an office there early in 1980 and from that point we developed the east coast business, including the relationship with FCS. The creation of FCS took place in 1979.

Did Les Robinson come in before that?

BD:      At the same time. There were parallel negotiations going on with Les Robinson and his two partners.

Who were?

BD:      Pat Taylor and Geoff Cambridge.

He had left the League hadn’t he?

BD:      Yes, they were both out of the League, they were all out of the League at that time. They were running an advisory service and had various involvements. We spoke to them and they wanted to set up a Bureau and all that sort of stuff. It looked like it was a potential goer. But during the same period of time that we were negotiating with them, Malcolm Mackellar and someone else, I have forgotten his name now

Were they at AFCUL or at the New South Wales Association?

BD:      This was the New South Wales Association.

Reg Elliott?

BD:      No, not Reg, one of his off-siders, Terry McManus. McManus and Mackellar came over to see us the week after we had spoken to Robinson. They put the idea to us that we should form a joint venture company. We eventually decided that was probably the most appropriate way to go and would give us better penetration. So we took 49 per cent of FCS and the League took 51 per cent. We gave that business, the marketing rights in New South Wales for the product. Andy Phelan shifted over to Sydney late that year and spent twelve months there training people and doing initial installations and all that sort of stuff. With the systems from all of the other staff we had of course at that time.

But you already had some installations up and running in both New South Wales and Victoria by that time, hadn’t you?

BD:      And Queensland.

Queensland, right. Can you remember some of them?

BD:      Oh yes, perhaps.

Can you remember who was the first outside?

BD:      In New South Wales it Was SGE, which was Helen McIntyre. That was one of the very first ones. Indeed another fairly important person to us in those times was Steve Thompson, who was in fact an employee of SGE. He came in that job and about twelve months later he joined us as an installation and training guy. He became a pretty important member of this team. I can’t recall who was the first in Queensland. Queensland Teachers’ were very early in the piece and that was a major installation.

What about your involvement with the United States and Canada?

BD:      We started the US business in 1981. Malcolm Mackellar, who was at that time General Manager of FCS, went over there to establish the business. Again Andy Phelan went over as technical support. We won a contract with a credit union called BELLTEL, which is one of the Bell Telephone credit unions, and they were based in the Bay area of San Francisco. So we actually established our first offices in their premises. That was a very successful installation. They already hardware that was compatible to what we required. That installation was completed late in 1981, early 1982. The software required an enormous amount of Americanisation at that time. We built up the business at the rate of around about initially six or eight installations a year. More recently twenty-odd a year. Right at this moment we have one hundred and fifty installed sites and around about forty on the back-order list for installation in the next twelve to eighteen months. We have a very strong user group, excellent relationships with the client base, and we are winning some very large credit unions recently. Initially we could only attract the small to medium ones. But now the very largest, big teachers and police credit unions, the aero-space industry, all those sorts of things, it continues to grow very well.

What about competition with Teledata-Steel?

BD:      When I moved into Melbourne in 1980 the VCCA in fact owned a large percentage of Teledata. They were not performing very well either systems-wise or financially. Early in 1983 the VCCA approached me and said, ‘The thing is losing $50,000 a month, what we can do?’ We offered to buy Teledata and we formed a company called GCS-Teledata. In actual fact that was in 1981. We took 51 per cent of GCS-Teledata and the VCCA took 49 per cent. We turned that business around very rapidly to effectively replace all of the old Teledata sites over a period of four to five years. That was one of the very major factors in fact in saving the VCCA from very serious financial troubles, because they really had no way out of a very difficult situation with the cost of running Teledata. It took six, nine, twelve months to really get the thing working properly, but once we had done that it was a very successful business.

From that period up until 1984 we actually had three entities in the country selling the same product. We had GCS selling in Western Australia, South Australia and Northern Territory. GCS-Teledata selling the product in Victoria and Tasmania, and FCS selling in New South Wales and Queensland. Each of those entities was in fact doing some development and some of that development was not compatible with what others were doing. Then there was a requirement to do some nationally-orientated projects like Redicard and various other card and transaction based systems. It was terrible frustrating for us, as private individuals, to try and come to grips with how you controlled all of the political activity and the State-based factions and so on. In 1984, I guess by mutual consent, FCS and ourselves got together and said the one way we could solve it was to bring all these disparate entities together under one base and give that entity the marketing rights to the product for the credit unions in Australia. Get control of the development and the directions and so on. So in May 1984 we effectively sold our interest in GCS-Teledata, our credit union business out of GCS and interest in FCS to what is now Financial Computing Services of Australia Limited, well it was then. That is probably the best deal that the credit union industry has ever done, because they bought a very valuable business and a very valuable product for very little money.

Did you continue to do development for them?

BD:      For a period we did some development. We delivered what was known as Release 12 and over the next couple of years we did some swaps of development works. That really terminated in about 1985. Part of the deal was that GCS would continue in its own right and maintain its version of the software products, and they were quite different even back in those days. Our building society product had moved away from what we were doing in the credit unions. We took the building society product and the marketing rights for all MBFIs and banks and everybody else, except credit unions. We took our development down one path and FCS went and did the things they had to do for the national good, if you like. We ended up having to do most of those things for the building societies as well, particularly ATM and card interfaces, credit card support, a whole lot of new functionality and legislative requirements and so on.

When you negotiated to sell to FCS, who did the negotiations?

BD:      Alan Norton, who was the then General Manager of FCS was mainly involved. Of course Reg Elliott and Ken Miller were on the side to complete the final agreements. But Norton was the chief negotiator, together with Nigel Gallop and myself.

Has it left you plenty to do now, outside?

BD:      Oh we are so busy that it is unbelievable. We have expanded our business internationally. We are currently installing a building society in Malaysia, we have got one to do in Bahrain. We have just done one in Papua-New Guinea. We have got thirty-odd sites in credit unions in New Zealand.

Done anything in any other languages than English?

BD:      No. No, we haven’t had to do that, thank goodness. South-East Asia in particular are quite happy to take software on an English base, so that works pretty well. But by far the biggest developments have taken place in the United States. We still do joint development exercises with the US company. We are very technically strong here. You can deal with new systems issues very comfortably here and export them to the United States and we have taken some work that they have done and integrated here in Australia, so it has worked very well.

Well that sort of brings us up to date. What about plans for the future?

BD:      Well we are trying to build a balanced business. Not of our own doing but mainly because of the political issues that exist in the credit union movement today with the different special service providers there is a rift if you like. We see that for various reasons those maverick credit unions, as people like to refer to them, need technology support. They don’t want to go to FCS so therefore they have got to look to an alternative. So they have come to us and we have supplied their requirements. We had to do an awful lot of work on the product to come back into the credit union business because there were a lot of things that we simply hadn’t done. It took us years, man-years of effort to bring what was effectively now the building society product back into line with what credit unions were currently doing. I think one of the things that I really have noticed is how many people have come up to me and said they are glad that somebody is back to provide some competition. They were all feeling perhaps that FCS hadn’t been doing quite as good a job as they should have, or could have.

Well it will be the FCS’ advantage too, because maybe they wouldn’t have been as share if they hadn’t have any competition.

BD:      That is possibly right. We certainly don’t have any intention to try and dominate the market place where there is a viable alternative supplier in the credit union industry. We want to see it to be a twenty or thirty per cent of our business, and the rest of the business in other segments of the finance industry. We have a very big user base in the trustees, executor and agency company arena as well, which sort of makes us a little bit more bullet-proof in terms of industry trends.

Is there anything else we should cover?

BD:      Well I really wish I had kept a better diary on all of the wonderful events that have taken place over the past fifteen years which we have been doing this. There were some amazing things performed. Some of the things we have done have just staggered other parts of the industry. I can recall in 1979, VTU Credit Union in Melbourne were in diabolical trouble. They were operating on a bureau in Melbourne and they had balanced for months and months and just couldn’t continue their service effectively. They made a Board decision on Wednesday night to go with us and they phoned us in Perth that day. They sent us a back-up copy of their data by courier that Wednesday night. We started writing conversion programs on Thursday and tested them on Friday. Meanwhile we had some interim equipment delivered to VTU on Friday and had it run up with some terminals and temporary cabling. I got on the red-eye out of Perth on Friday night and we did the conversion on Saturday, did the training on Sunday and they went live on Monday morning, four days or five days from the date that they made the decisions, which is really just incredible. They have been just the happiest of users ever since. In fact we did another conversion for them only two weeks ago to move them on to new Hewlitt-Packard equipment. That sort of story has been repeated so many times. Really successful installations and very happy users. Achieving results and goals that would appear to many other segments of the industry to be just impossible to achieve.

I have heard these stories from other people.

BD:      Some of the same sorts of things have happened in the US and wherever else we have been. So it has been a very rewarding experience. I think we have put an awful lot back into the industry in terms of all the money that we spend in keeping development up to date and returning it back into the user bases. New functionality and new compliance with legislation and all that sort of stuff. I think we have had a very major influence on credit unions and other MBFIs in their ability to compete in office services with other sections of the finance industry. I think without that sort of facility they would have had a cost structure that would have made their survival very difficult. So I think that is a pretty major contribution. We haven’t done it for nothing of course. I mean financially it has been a very successful business and continues to be. But that is exactly how it should be, with returns to everybody.

Well thank you very much Mr Brian Dean.

End Tape 1A: 2837 Words: 1 hour 15 minutes.