How To Outsource Credit Union Core Processing

A California credit union finds focusing on mission helps culture follow technology.

 
 

Xceed Financial Credit Union ($969.9M, El Segundo, CA) examined what was inside before outsourcing its core processing system.

According to its chief technologist, Mark Coudriet, that introspection helped the 76,747-member Los Angeles credit union decide whether it was a technology company or a financial services provider.

“During strategic planning, the answer for Xceed became clear,” says Coudriet, Xceed’s vice president of information technology for the past six years. “We exist to serve our members’ financial needs and to help them realize their dreams. Placing our technology assets into a data center enables us to focus more on our mission as a credit union.”

Mark Coudriet, VP of IT, Xceed Financial Credit Union

Mark Coudriet, VP of IT, Xceed Financial Credit Union

Xceed has been running on the DNA platform for 11 years and recently transitioned from an in-house to service bureau environment. Courdriet - who has been through five mergers and data conversions at Xceed - says the process was similar to converting to a new platform in some ways, and in other ways it was quite different.

The two greatest similarities, he says, are the coordination required between the core providers for connectivity and file transfers as well as the review and specific sequencing of batch jobs.

And the differences?

“With this process [outsourcing on the same core], you’re able to forgo business practice comparisons, special member disclosures, and changes to existing products or employee authorizations,” Courdriet says. “Another advantage is there’s no need for comprehensive data mapping or the front-line training requirements necessary with a general core conversion.”

Still, converting to a data center relationship is no walk in the park. It’s a major undertaking that engages the entire back-office. There must be comprehensive testing and consideration given to third-party files and connections, batch and sequencing, changes to workflows based on report transfers and new data center timelines, and network design, Courdriet says.

Core Knowledge At Your Fingertips

Callahan's 2017 Supplier Market Share Guide: Credit Union Core Processors is a helpful guide for leaders who want to understand the performance and strengths of players in the core space and assess both current or, potentially, future core partners. The Core Guide offers a look at:

  • Client performance,
  • Aggregate assets for credit union clients,
  • Descriptive metrics for each platform.

Contact Callahan to order your copy today.

Contact Us
2017 Supplier Market Share Guide: Credit Union Core Processors

So, why do it?

The world was a different place when Xceed originally implemented its in-house system, Courdriet says.

“Over the years, our core system’s support and delivery model remained static while the surrounding innovation, security, and regulatory landscape evolved significantly,” he says. “We’d reached a crossroads and decided an outsourced support and delivery model would deliver greater member value and greater flexibility to respond to future technological change.”

And that, indeed, has been the result.

CU QUICK FACTS

Xceed Financial Credit Union
Data as of 09.30.16

HQ: El Segundo, CA
ASSETS: $969.9M
MEMBERS: 76,747
BRANCHES: 12
12-MO SHARE GROWTH: 6.3%
12-MO LOAN GROWTH: 7.8%
ROA: 0.00%

“As anyone in IT knows, skills and tactics become obsolete quickly,” Courdriet says. “It’s more efficient for us to outsource to a core provider who’s focused on keeping ahead of the continuous upgrades, improvements, and regulatory changes affecting the system. These efficiencies allow our internal resources to concentrate on other strategic opportunities.”

That concentration includes a focus on internal and external growth alike. For example, costs are structured and more predictable. And in the case of a merger, outsourcing eliminates the additional expenses normally associated with the hardware, software, and support required to provide a mapping environment.

Meanwhile, Xceed can put more focus on organic growth.

“This transformation to a data center environment helps us refocus our internal competencies on our mission and realign our resources to accommodate growth and expansion of innovative financial services for our members,” Courdriet says.

Courdriet does offer one caveat about merging another credit union with an outsourced core: “There’s more coordination needed to test batch processing since the institution does not run this process in-house anymore and must engage the core provider to set up and have batch-tested during the data cuts.”

Xceed Financial Credit Unions uses the DNA core processing platform from Fiserv. Find your next solution in the Callahan & Associates online Buyer's Guide.

Xceed’s technology chief has other lessons to share.

If you can go live and the front-line associates don't notice a change, you've succeeded.

Mark Coudriet, VP of IT, Xceed Financial Credit Union

First, it’s important to know the existing businesses processes, including current workflows and reports.

Next, take ownership because success will depend on strong project management and coordination

“This initiative is your initiative,” Courdriet says. “The challenge should not be taken lightly.”

“Be prepared to make bold decisions during the process,” he continues. “Invest the resources needed to ensure all aspects of implementation are completed to the highest standards.”

Finally, prepare for the change in culture and expectations that come with moving the credit union’s core technology hub away from the in-house technologists and managers.

“We officially eliminated in-house customizations even before we signed the contract,” Courdriet says.

Xceed still had to take care of changes right up until the go-live date, but the overall approach allowed management to ease business units into the change and avoid shock when the conversion took place, Courdriet says.

“If you can go live and the front-line associates don’t notice a change, you’ve succeeded,” the Xceed vice president says.

 

 

 

Dec. 5, 2016


Comments

 
 
 

No comments have been posted yet. Be the first one.