At The Center Of It All

Whether it’s through conversion, in-house development, or a third-party extension, keeping core systems at peak capacity is a must for any institution.

When it comes to productivity, efficiency, and many other crucial metrics, the core is king. Core systems form the backbone of the credit union business model and affect everything from services offered to the online and in-branch member experience.

Even after successfully managing the economic downturn, credit unions like most financial institutions are still experiencing squeezed margins that are stretching dollars to the limit. That’s why now is the right time for creditunions to prioritize efficiency like never before. Why waste 45 minutes on an activity that could take five? Why spend money on paper processes when you canclose a loan electronically? Why stay with a burdensome legacy system when a modern one could prove less costly and more customizable?

According to data gathered by Callahan & Associates, in the past year alone, 795 credit unions changed data processors. A complete core conversion is no small matter, but in many cases it proves well worth the risk. ForOrion Federal Credit Union ($531M, Memphis, TN), a 2012 conversion from an aging system has helped spur dramatic gains. According to Callahan & Associates’ Peer-to-Peer analytics, the credit union posted an annual loan growthof 28.7% in 3Q 2013.

But full conversion is just one of the many options credit unions have to keep a keen edge on their technology offerings. For Fairwinds Credit Union ($1.7B, Orlando,FL), in-house modifications to an existing core system yielded impressive results, including decreasing the time needed for account openings from 45 minutes to three.’

Because the credit union uses a flexible core that allows for smooth application integration, the institution’s development team has been able to dig deep in its efforts to customize the platform. What’s more, the credit union can sell thefruits of these efforts to its core provider’s other clients, which supports Fairwinds’ income while benefiting peers without such development capabilities.

When viewed according to assets, roughly 81% of the credit union industry uses one of three core providers: Fiserv, Symitar, or FIS. But there are many other core companies who tailor their services to niche segments of the market. For example, FedComphas achieved major market share by focusing on serving the needs of small cooperatives, such as Valley Wide Federal Credit Union ($471K, Vernal, UT). Withno in-house resources or technology dollars to waste, this credit union prioritized accessibility and personalized support as the key items its was seeking from its core relationship.

Regardless of how a credit union arrives at its intended performance goals, hitting your technology stride with a core that meets your needs can make all the difference. If you’re tired of being complacent in this area and need new options, readon for key strategies to get more out of your core

July 11, 2014

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