CU Technology Expenditures to Reach $1.6 Billion in 2005

Results from a recent Callahan survey indicate that the industry’s IT/ecommerce expenditures will account for 8-10 percent of operating expenses in 2005.

 
 

Results from a recent Callahan & Associates survey of credit union chief technology officers indicate that the industry’s IT/ecommerce expenditures will account for 8-10 percent of operating expenses, or approximately $1.6 billion, in 2005. The level of expenditures, which includes software and hardware, security, external consultants and staff salaries, highlights the ongoing investments being made in technologies that improve member service and increase internal efficiencies.

The 126 survey respondents represent over $69 billion in assets, or approximately 10% of the industry total. The table below provides detail on the responses to the question that asked credit unions to estimate their technology operating expenses as a percent of total operating expenses. The median response falls in the 8-10 percent range.

Question: Please estimate your technology related operating expenses as a percentage of your total operating expenses for 2005

 Amount

% of Respondents

Average Assets of Respondents

Less than 5%

12

$498.1MM

5% - 10%

50

$514.5MM

11% - 15%

24

$855.4MM

16% - 20%

13

$570.7MM

Greater than 20%

1

$49.9MM

How are credit unions allocating their technology expenditures?

The survey also asked respondents to identify how their technology budget is allocated across three functional categories:

  • Core systems
    Includes deposit systems, loan origination and servicing platforms
  • Member interaction
    Includes branch technology, Internet banking, ATMs and call centers
  • Member knowledge
    Includes member information databases, decision support systems and sales support systems

The results indicate that core systems continue be the dominant focus of technology spending. Although the average of these responses falls short of 100 percent, the results provide an indication of expenditures across these categories.

Complete details on credit union technology spending dynamics and priorities in 2005 are available in the just published Credit Union Technology Survey. Click here for more information.

 

 

 

June 20, 2005


Comments

 
 
 
  • I am pleased to see Member Knowledge at 14% of the total spend. As Credit Unions continue to compete more and more with banks (as well as each other) as Community Charters and Indirect Lending expand, having accurate current information on existing and new members is crucial. As competition in the market increases, 'existing' member knowledge and 'potential/new' member knowledge is an area where the Credit Union Movement must improve on, if they are to compete effectively in today's ever increasing competitive market .
    Anonymous
     
     
     
  • I am pleased to see Member Knowledge at 14% of the total spend. As Credit Unions continue to compete more and more with banks (as well as each other) as Community Charters and Indirect Lending expand, having accurate current information on existing and new members is crucial. As competition in the market increases, 'existing' member knowledge and 'potential/new' member knowledge is an area where the Credit Union Movement must improve on, if they are to compete effectively in today's ever increasing competitive market .
    Anonymous