During my sixteen years in the credit union industry, including the past several years as leader of the sales and marketplace development team at CU*Answers, I have observed scores of credit unions embark on a core data processing switch. Several factors have changed during my tenure–consolidation of credit unions and core processing options, and a widening credit union asset size gap. At the same time, the breadth and depth of core offerings have expanded in alignment with more credit unions product/service offerings, and concepts like business-to-consumer and internet retailing have become critical success factors.
But what has not changed dramatically during that time are the factors involved in the decision “to shop or not to shop.” If your credit union is considering a core data processing change, the factors below are likely the biggest obstacles you’re facing to taking that next step, and why you should consider a cooperative solution to get that push out the door.
The challenges facing credit unions
1. The cost of a new solution
The cost of bringing in a new core solution is typically the biggest perceived challenge by the credit union and perhaps the biggest differentiator that a cooperative can bring to the table.
2. Contract roulette
Inventorying the stack of vendor contracts is an important part of the process. Many vendors like to stagger contract terms as a potential barrier to leaving. The more vendors a credit union uses to deliver core functionality, the more complex the process becomes.
3. Memory of a bad conversion experience
Over the years, CEOs on many occasions have lamented to our sales team that they were still recovering from their last core conversion. Or that a new core project was not something they wanted to put their team through. Memory of the last conversion often has a lingering effect on staff that were there for it, making moving forward a more difficult task.
4. Existing infrastructure investments
As the industry has transitioned from self-processing to cloud-based core platforms, the concern about fixed asset challenges from a core data processing change has lessened. Top of mind for today’s core data processing shoppers: can I leverage my existing investments in desktops, printers, scanners, signature pads, servers and network communications?
5. Disruptions to member service
The impact a core conversion has on a credit union’s members is a major concern, and something that is akin to the Holy Grail for firms like ours. Avoid taking a “don’t rock the boat” mentality when making the decision to move or not–members will adapt.
How CU*Answers addresses these concerns
As a customer-owned cooperative, CU*Answers builds its strategies around the credit unions it serves and is owned by. We’ve worked to tackle each of these concerns to ensure a smooth and effective core transition. With respect to pricing, we believe strongly that we should charge only when we have to, not simply because we can. By owning nearly all of the tools, and thus controlling pricing, we often deliver pricing reductions and even eliminations to our customers. And by making pricing an ongoing, full disclosure dialogue with our customer-owners – like our upcoming Pricing Focus Group event – we can ensure the owner’s voice is heard. Another part of reducing cost: working with converting clients to ensure they get the most out of their existing infrastructure.
To assist with contract management, CU*Answers notifies all customers in writing well in advance of their contract renewal date to ensure full disclosure. And, as you would expect from a cooperative, our contracts are not assignable to another entity.
Nothing can derail the idea of a change more than memory of the last one. Recently I had a CEO tell me he did not want to talk about core even though we were discussing doing some other business together. I honored that, and over the course of several months, and several calls to his peers who were part of our cooperative, the CEO engaged us in a core search and came on board six months later… on their terms and after researching our track record on recent core conversions. CU*Answers makes our entire client list and contact information available to anyone who wants it, and encouraging prospects to talk with newly-converted peers can help remove their apprehension based on past history.
CU*Answers has invested greatly in people, processes and tools to help minimize the impact on members, while, at the same time, maximizing their exposure to new tools to leverage at their credit union. From outbound member communication pre-conversion to inbound call center services post-conversion and multiple touch points in between, our cooperative brings an evolving set of best practices to the table for every project.
The “to convert or not convert” question will continue to be asked as long as there are credit unions and core alternatives. I believe that a customer-owned business model is the best way to not only align with the credit union’s business plan, but also to be an effective change agent that helps ensure success for the credit union, its members, the cooperative and the industry.