With the credit union industry’s increasing focus on meeting the individual needs of the members and the intensifying need for a multitude of delivery channels, the path to the future of the credit union industry must wind through the issue of technology. More precisely, the specific technology that drives the core data processing system that lies at the heart of all technology platform infrastructures. Until there is real change on this front there can be no significant impact or ROI from any of the new products, initiatives or strategies implemented by credit unions. To that end, credit unions must demand from industry vendors core systems built upon contemporary industry standards along with relational database infrastructure. To reach this conclusion is a simple process. Legacy technologies are structured in flat file, transaction-based architectures providing little more than account processing. The end result has been an array of stand-alone ancillary systems connected by middleware to mask the inherit problems associated with aging legacy core technology. Thus, credit union executives end up with redundant data, inefficiencies and, in some cases, conflicting information delivered to the member through multiple delivery channels utilizing multiple and redundant database structures.
Relational technologies, on the other hand, present the ability to consolidate all data into one well-architected and designed data structure. This “modeling,” as it is called, reflects the nature of the business, in this case credit union banking, and allows for change and evolution to occur with far less need for customization. All delivery channels interact and exchange information with the single database. The end result is a clear, accurate and up-to-the-minute balance or status of every member’s account and relationship with the credit union. All this information is real-time in nature and the long promised and poorly executed concept of true Customer Relationship Management can now have real value.
While this is all easily said, the ultimate goal of implementing a path to the future can only be achieved by a change in mindset as it pertains to core processing, and more importantly, a commitment by core providers to evolve their technology in this direction. This evolution must also begin and end with credit union executives themselves or the change will never occur and the industry will continue to be hobbled by poorly integrated and increasingly expensive products that provide no real solution. First and foremost, credit unions can no longer afford to look at core processing as simply account processing. This attitude has commoditized the industry and has resulted in the delivery of core systems that, while being efficient account processing vehicles, require numerous add-on systems to provide any level of member understanding or business optimizing information. In the end, the credit union pays more for IT solutions and receives a far less rich set of member information.
The second requirement can become self-fulfilling if credit union executives demand more from the core providers in terms of systems that facilitate overall member service. In demanding more, they must also take a closer look at what is then delivered. Integration of graphical front add-on systems can not be allowed to substitute for new core architecture. Form cannot pass for substance. When a builder constructs a new home they take great pains to ensure that the foundation is strong and well designed. Failure to do so would result in the house functioning poorly or even collapsing. The core system is no different. In the last 20 - 30 years, the industry, by analogy, has allowed core providers to attach room after room with little or no thought given to how it affects the foundation -- the core system.
Any true path for technology logically must begin with a careful examination of the foundation core data processing system and consideration of a key question. “Will this system carry us into the future? Will the system in place today handle the needs for the requirements of today’s commerce and tomorrow’s upcoming challenges, and further allow our credit union to compete in an ever changing marketplace?” If your answer is ‘no, I’m not sure’, you may want to consider some of the industry alternatives that are out there like Open Solutions. You may be surprised.
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