At The Core, It’s More Than A Commodity

After years of integration, core processing platforms remain at the heart of today’s credit union technology.

Several years ago, the idea of the commoditization of the core processing system gained some currency in credit union industry thinking.

The demand for plug-and-play functionality that grew slowly after Stanford Federal Credit Union became the first financial institution to offer online banking, then gained steam as debit and credit card services went digital, exploded with the mobile revolution.

Integrating all this functionality in a single environment became the brass ring for many of the industry’s leaders, and projects like BECU’s weekend conversion of multiple systems into a single entity showed that it could be done.

At the center of that long weekend in 2002 was Open Solutions, the upstart core processor that became an industry leader and competitor with Symitar for the hearts and minds of hundreds of credit unions, a rivalry that saw the two become the leading evangelists of connectivity in their space. (Their competition included launching app stores where credit union technologists could offer up their own add-ons to those cores.)

Open systems, touting the ability to easily mix and match vendors, were hailed as the answer to locked-down legacy core platforms, and the notion of the core transactional platform as just one of those ancillary solutions, appeared to take hold.

The core processor, sooner if not later, would be as swappable as a router. It would become a commodity.

Now, it’s 2016. Open Solutions belongs to Fiserv, which continues to compete with Symitar, among other successful core processors large and small, for the shrinking field of credit unions to serve. And as for core processors’ diminishing role in the credit union infrastructure?

Well, there are far fewer credit unions now but a lot more members who demand a growing variety of ultimately tech-based services from the 6,000 or so left. About 2,100 of them run on Fiserv’s 13 cores, and another 850 or so on Symitar’s Episys and Cruise cores.

Mark Sievewright has just stepped down as President of Credit Union Solutions at Fiserv.

The core processing platform is still like air. Without it, a credit union doesn’t breathe well, says Mark Sievewright, who recently stepped down as president of Credit Union Solutions at Fiserv after 11 years that included leading the transformation of a group of siloed, discrete operations the company had bought into one division that shared instead of competed.

The senior exec at his chief competition, Symitar president Ted Bilke, also says the core system indeed remains at the core of the credit union system. It’s the system of record and the repository of the primary financial data, he says. The biggest change has been the opening of that information regardless of the channel.

That means seamlessly as possible serving the members where they are: in the branch, on the smartphone, or at the computer. And with targeted products and services selected as much as possible by parsing the consumer data residing within the servers.

Ted Bilke is President of Symitar, a division of Jack Henry Associates.

Sievewright’s successor, former Fiserv card services chief Vincent Vinnie Brennan, says he’ll be bringing to his new role the same focus on consumer behaviors and needs, growth patterns, and strategies his company provides to more than 3,000 credit union card issuers. Each client has its own needs, he says. Some are more aggressive and competitive, while some just want to maintain. It really depends on their outlook, he says.

Sievewright puts it this way: We think about all the things they should be doing, not necessarily just the core. When I think about a client, say NavyArmy, I don’t think about DataSafe, I think about Sarah O’Brien and her team and what they’re trying to achieve.

Achieving goals doesn’t mean just pleasing members with pretty interfaces, slick apps, and changing product offerings. Providing a secure environment and compliance also are areas where cores are evolving their ability to accommodate with code.

Vincent Vinnie Brennan is the new President of Credit Union Solutions at Fiserv.

For instance, Bilke says Symitar is undergoing some major changes in its support of the legacy OFAC screening solution in the Episys platform.

They are going to quit supporting it at the end of 2017, replacing it with a Lexis-Nexis solution that already has been integrated into Episys. Symitar technologists are working on similar projects with the Patriot Officer and Verafin OFAC verification solutions.

We’re doing that because of changes in the PATRIOT Act itself that make keeping up beyond the scope of the legacy system, Bilke says. He says 600 to 700 of their clients have already made the switch to other products, with only about 200 left on the legacy core functionality.

That’s an example of the integration work with other technology providers that continues apace. And that’s because, as Bilke says, The core can’t be everything. But I still see us as the enablers.

September 15, 2016

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