Late-night phone calls are rarely good news, but Steve Branstetter no longer worries about getting them from work. That’s just one of the benefits of outsourcing core processing operations, says the executive vice president and chief financial officer at People’s Trust Federal Credit Union ($500.6M, Houston, TX).
Nights, weekends, if the phone started ringing, my heart started racing; I just knew it was something IT-related, Branstetter says. But not now. That’s one less thing we have to worry about.
For six years, the credit union internally housed its core processing operations using the Episys platform. But on June 2, 2014, People’s Trust went live with Symitar’s data centers. And according to Branstetter, the credit union is not alone in its strategy.
There’s been a big pendulum swing from everyone wanting to go from service bureaus to in-house and now back again, Branstetter says. We’re part of a trend.
|Steve Branstetter, EVP/CFO, People’s Trust Federal Credit Union, Houston.|
There And Back Again
Symitar would agree. According to the core processor, 22 of its credit union clients made the switch from in-house to outsourced solutions in its fiscal year that ended June 30, 2015.
A switch in strategy also requires a switch in mindset, Branstetter says. For many credit unions, in-house processing allows them to run their own show, especially in regard to third-party ancillary products. But, Branstetter cautions, that can lead to situations where fascination with new technology obscures the institution’s mission.
We’re a credit union; we’re not an IT company, says the longtime credit union executive.
His advice: Don’t let your ego get tied up with running your core processing system in-house and talking about what you’re doing all the time around the industry. You can find better things for your IT staff to do.
CU QUICK FACTS
PEOPLE’S TRUST FEDERAL CREDIT UNION
Data as of 09.30.15
- HQ: Houston, TX
- ASSETS: $500.5M
- MEMBERS: 27,828
- BRANCHES: 6
- 12-MO SHARE GROWTH: 5.66%
- 12-MO LOAN GROWTH: 22.24%
- ROA: -0.04
- Core Processor: Symitar Episys
Reallocation Of Resources
When People’s Trust migrated its core, it indeed found better things for staffers to do. No one lost their jobs, but jobs did change.
According to Branstetter, instead of grunt work, such as ACH postings, file transfers, and simple daily tasks, the IT staff now focuses on enhancing internal support. And staffers still have the ability to improve the system. For example, they can use the processor’s programming tools to write their own applications.
It’s more productive for us and creative for them, Branstetter says.
The credit union’s IT team includes six employees two who focus on the Symitar platform, two who concentrate on network functions, a staffer who primarily produces reports, and a manager.
Symitar’s data centers handle all the routine daily operations, including end-of-day backups and system upgrades. The credit union also outsources home and mobile banking, loan origination, and card processing.
However, People’s Trust has retained certain in-house functions. These include reporting, image storage, voice response, ALM budgeting and financial software, and some security functions around Bank Secrecy Act and anti-money laundering requirements.
Every situation has to be evaluated separately, but I’d recommend outsourcing as much as possible unless it doesn’t make operational or economic sense.
A Sense Of Security
Security in today’s modern era of financial services means ensuring regulators and members alike that the credit union is up and running or can quickly recover should anything untoward happen.
Branstetter says the cost of replacing servers and adding others for required redundancy was a tipping point in the decision to outsource. Redundancy is no longer an issue now that People’s Trust is running on data centers operated by Symitar owner Jack Henry Associates in Lenexa, KS, and Branson, MO.
When you look at the cost of staying in-house and doing all the things required to support that versus outsourcing, the costs are about the same, Branstetter says.
While pleased with the staff time recaptured and operational reliability gained, the Houston credit union CFO acknowledged the work leading up to the switch was substantial.
We had about a three-month lead time, Branstetter says. Our staff had to reassign IP addresses for all consoles, re-define all the printers, and get all our data circuits in. We had weekly calls with Symitar to make sure we were on track.
The credit union migrated over a weekend, and each branch had to make sure transactions were transacting and printers were printing. But now it’s clear sailing, according to Branstetter.
Every situation has to be evaluated separately, but I’d recommend outsourcing as much as possible unless it doesn’t make operational or economic sense, the veteran CFO says. Let somebody else worry about getting those calls in the middle of the night.
You Might Also Enjoy
- Increased Competition Fuels Core Market Share Gains And Losses
- Why Did This Alabama Credit Union Take Back Its Core?
- Core Advice From A CEO Technologist
- How To Extract Maximum Value From Core Processing