For all their differences, credit unions can be split into two camps — and it’s not who has a state charter versus a federal charter.
Amid ongoing shifts in the industry, some shops are choosing to work with core processing providers that exclusively serve credit unions as opposed to vendors that cast a wider net and also work with banks and other financial firms.
Many cooperatives are drawn to credit union-only providers for their tailored understanding of the industry. Companies like Corelation, Sharetec Systems, CU*Answers, and others claim to offer clients member-centric tools and regulatory expertise that can be difficult to find elsewhere.
Switching to a core provider that serves credit unions and beyond? Two leaders offer the advice they’d have given themselves if they had to do it all over again in “Pick Your Provider: Why Bigger Is (Sometimes) Better.” Read it today.
Weighing Value Versus Cost
Not surprisingly, operational efficiency and cost are often key components of the decision-making process — especially for smaller institutions.
After more than two decades with Sharetec, a web-based core provider specifically for credit unions, Gas & Electric Credit Union ($119.9M, Rock Island, IL) made the switch to another credit union-only provider: CU-Interface, a CUSO based in Grand Rapids, MI.
“We had been with Sharetec for 23 years, but there many reasons we decided to look at moving on,” explains Daryl Empen, president of Gas & Electric.
The credit union worked closely with a consultant to narrow down its list of potential new providers, taking a close look at Flex, CU*Answers, and CU-Interface.
“After seeing demos of each, we ruled out CU*Answers right away, as everyone felt their platform seemed clunky and antiquated,” he says. “We really liked Flex but had some reservations after a site visit with another credit union. We had two site visits for CU-Interface and their mPowered platform, and after those the choice was clear.”
Empen says the switch to CU-Interface has helped with automation, making the credit union’s back office more efficient. For example, ACH processing and returns take significantly less time.
First Conversion In 25 Years
When Everglades Federal Credit Union ($54.8M, Clewiston, FL) made the switch from Fiserv to CU*South in 2023, it was the credit union’s first conversion in 25 years. Although converting from a major player to a credit union-specific provider was part of the equation, the biggest aspect in the decision was ensuring better value for what it was paying.
“The system we were on was not integrated with many of the products forced upon us due to them sunsetting the ones we were using,” says Marta Betancourt, CEO of Everglades FCU. “On top of that, we had to pay outrageous prices to switch from a product that was working perfectly. Additionally, it was taking us 45 minutes to open a savings or checking account, and we were having to do a lot of reporting manually.”
Switching vendors allowed Everglades FCU to improve not only internal processes but also member experience.
“Life is so much easier,” the CEO says. “The members love the new online banking and mobile app, and we are able to offer more products for less than half the cost.”
Support for Smaller Institutions
Outside of operational efficiency and cost, many institutions are drawn to credit union-only providers for their tailored understanding of the industry and quality of service. Smaller, more specialized vendors might be able to provide more timely and effective support.
“Another issue was [Fiserv’s] ticketing system for resolution of problems,” Betancourt says. “We weren’t getting resolutions until a week or so later. With [CU*South], we started eight months in advance with configurations and had a biweekly call for the different departments. There was a lot of information that had to be configured. They were very patient and knew that we would not be able to retain it all.”
For Gas & Electric, Empen says support is as important — if not more — than the day-to-day product.
“We expect all cores to work most of the time, so when there is an issue, the turnaround time on support and the ability to resolve is critical,” he says. “We also like the fact they are CUSO-controlled, and we can have a say in the future development of the system.”
Indeed, one of the most common perks associated with credit union-exclusive core providers is the networking and collaboration they facilitate among their clients.
Empen says although the decision to stick with a credit union-only provider wasn’t necessarily intentional, it does contribute to the organization feeling good about its decision.
Similar to Everglades FCU, CUSA Federal Credit Union ($31.8M, Covington, LA) made the switch from Fiserv to a credit union-only core provider, converting to Sharetec in 2023.
“Small credit unions lean on vendor support so heavily due to often small staff sizes,” says Jeana Rodivich, CEO of CUSA. “We have to be able to depend on all of our vendors to provide the support they promise. Support was our No. 1 priority.”
Rodivich says working with an exclusive credit union provider “definitely made an impact” in the decision-making process.
“Being a small credit union, we take comfort in the fact this is all they do and they treat each credit union the same, regardless of size,” she says. “We feel like we’re part of a family now. The user conference each year is awesome, and they always make you feel welcome and happy to see you.”
Not A ‘Must Have,’ But A ‘Nice To Have’
Credit union-exclusive status helps, but it isn’t the only consideration that goes into making the final decision on a new core provider.
At one mid-sized credit union in the Upper Midwest — whose CEO asked to remain anonymous to speak freely — working with a credit union-only provider was nice, but it wasn’t a major factor in the decision-making process during a recent conversion to Corelation’s Keystone platform.
When it comes to a core conversion, what really tips the scale to choose one provider over another. A survey of industry leaders sheds some light, and it extends way beyond the price tag. Read more today.
“We like working with credit union-focused organizations if we can, but it’s not always possible,” he says. “More than anything, [we chose our core because] it was written by experienced people with a proven track record of serving credit unions.”
One of the bonuses of the new platform was the level of customization available, which this CEO says wasn’t available with his last provider.
“We looked at every aspect of how we run the business and how we want to run the business for the future,” he says. “We could be really granular and customizable with Keystone, which is important to credit unions because we all kind of have our own secret sauce.”
Aaron Passman contributed to this article.
