All For One Or One For All?

Two credit unions share the benefits and drawbacks of mix-and-match and single-vendor strategies.

 
 

Separated on the map by only a few hundred miles, BCU ($2.0B, Vernon Hills, IL) and Four Points Federal Credit Union ($120.8M, Omaha, NE) have a lot in common besides their regional orientation.

Both have a field of membership based on select employee groups with members nationwide, and both strive to offer a range of products and services — everything from basic checking to remote deposit capture — to compete in the modern financial landscape. Both organizations are even updating their infrastructure with plans to offer cloud storage.

From a technology standpoint, however, that’s where the similarities end. BCU is the poster child for credit unions that use multiple technology providers.

“We’re constantly looking for ways to improve our processes and make our business grow,” says Jeff Johnson, senior vice president and chief information officer at BCU.“The way to do this is through software solutions that optimize our ability to work with lots of vendors.”

Conversely, Four Points relies on the solutions of a single trusted technology partner.

“We could have gotten different components from different companies and then have them dicker with one another all the time, but I don’t have time for that,” says Donnie Price, the president and CEO of Four Points.

Both of these Midwest credit unions are moving toward their shared goal of seamless integration, yet neither approach is without its own opportunities and challenges.

BCU Taps Many Vendors To Fulfill Its Multifaceted Vision

Founded in 1981 as Baxter Credit Union, BCU is a primarily SEG-based organization that serves Baxter International, Target, and many smaller companies in the United States and Puerto Rico.

CU QUICK FACTS

BCU
data as of 09.30.14
  • HQ: Vernon Hills, IL
  • ASSETS: $2B
  • MEMBERS: 191,908
  • BRANCHES: 39
  • CORE PROCESSOR: Symitar Episys
  • HOME BANKING: In-House
  • MOBILE BANKING: Wescom Resources Group for Android and iPhone apps. In-House for web-based.

Johnson, the credit union’s CIO, is a veteran industry leader who has spent nearly two decades working with various partners — including Wescom Resources Group, the tech CUSO for Wescom Credit Union — to more efficiently link solutions together and drive new software possibilities.

For example, Johnson was a leader in the creation of CUFX, a software integration standard that BCU uses to help different systems — such as its Symitar Episys core platform, PSCU card data, MoneyDesktop personal financial management software, and FreedomPay swipe-and-pay system — speak to one another.

But BCU’s integration efforts don’t stop with CUFX. It also uses PSCU’s Data eXchange to provide basic information — such as transaction history — as well as advanced options — such as transferring balances, increasing credit lines, advancing cash, and reporting lost or stolen cards — within the same Internet banking user interface.

“Using the same interface makes for a better member experience,” Johnson says.

BCU relies on different vendors to provide solutions that fulfill a range of roles — everything from loan servicing to collections, IT to workflow management. This allows the credit union to operate more efficiently. For example, because BCU uses SMA OpCon automation software, it can get by with just one IT operator instead of the four it used before. This frees up its highly trained in-house IT staffers to pursue other projects.

“We have some really smart, driven people here who want to see the business succeed and the members served,” Johnson says. 

Four Points Goes All In On Efficiency And Security

Founded in 1934 as the Farm Credit Administration Cooperative Credit Association, Four Points was Nebraska’s first chartered credit union. Today, it serves more than 7,100 members from agricultural cooperatives or other select groups nationwide.

CU QUICK FACTS

FOUR POINTS CREDIT UNION
data as of 09.30.14
  • HQ: Omaha, NE
  • ASSETS: $121M
  • MEMBERS: 7,176
  • BRANCHES: 1
  • CORE PROCESSOR: D+H UltraData (Tentative go-live April 30, 2015)
  • HOME BANKING: D+H Cavion (Tentative go-live April 30, 2015)
  • MOBILE BANKING: D+H Cavion (Tentative go-live April 30, 2015)

This year, Price — who joined the credit union as CEO three years ago — and his management team made the crucial decision to initiate a sweeping makeover of its support solutions. This process will include converting from the Fiserv Spectrum platform it has been on for roughly two-and-a-half decades  to the UltraData platform, now owned by Canada-based Davis+Henderson.

The go-live date for the new system is April 30, 2015, but that timeframe depends on the exit negotiations with Fiserv, Price says.

Regarding its new provider, Four Points’ agreement stipulates that the credit union will not face any rate increases throughout the life of its contract. In addition, the credit union’s staff will also likely benefit from the new system’s enhanced core accounting functions.

“The member service pieces are intuitive and seem easy to learn and use,” Price says.

Four Points will use a service bureau to run UltraData as well as item processing and loan servicing tools that include:

  1. Cavion home/mobile banking and RDC.
  2. Touché CRM software.
  3. Mortgagebot loan origination.

In addition to breaking ties with Fiserv, Four Points is also leaving its local disaster recovery/business continuity provider in order to use D+H’s C3 cloud computing service.

According to Price, although the C3 system is a separate operation from the rest of D+H, Four Points trusts the new core provider to work out the integration of the shared server network. Meanwhile, he’s looking forward to moving to remote servers and saying goodbye to the IT demands that come with maintaining desktop computers with individual operating systems.

If you’ve got a good feeling about it and trust this company and its track record, then it’s probably simpler in the long run to go with one vendor. 

“We’re going to a thin client system, which will greatly reduce our hardware requirements,” he says.

The move is part of a cost-savings strategy that is also expected to provide significant regulatory relief.

“It comes down to seamless integration,” Price says. “The NCUA is hitting IT examinations hard, and I had to figure out a way to economically put intrusion detection and prevention systems in place.”

Four Points has all the resources it needs, and because it doesn’t have to manage all the processes by itself, it can get away with employing one part-time IT person.

Buy, Build, Or Mix The Two?

Neither credit union’s strategy is completely bulletproof. They both require a credit union to be honest with itself and in touch with the institution as well as the membership. Plus, the credit union must be willing to take smart risks to get ahead.

For example, Four Points acknowledges its strategy largely depends on the success of a single vendor, yet Price views this as a valuable opportunity to invest in UltraData and Cavion.

“This whole idea of putting all your eggs in one basket can be an issue,” he says. “But I’ll take that over the alternative of integrating everything and managing different vendors.”

For credit unions that want to follow in Four Points’ footsteps, Price’s most crucial piece of advice is to make sure you can fully trust the one partner you’ve chosen.

“If you’ve got a good feeling about it and trust this company and its track record, then it’s probably simpler in the long run to go with one vendor,” he says.

BCU, meanwhile, has worked so closely with different software providers that it has taken on the role as an industry technology leader in some respects. Johnson himself serves on user boards and sits on the CUNA Technology Council. He also oversees a couple of dozen technology-related staff members back home in suburban Chicago.

Although Johnson strongly advocates for effective middleware, he advises credit unions looking to build versus buy to make human capital their primary investment.

“You need to take a look at all the available technologies when you’re making a decision, but you also have to have a strong architectural team so you can have both a technical and holistic perspective,” he says.

For BCU, that means incorporating technology decision-makers from across the enterprise. 

“We have software programmers and architects, but we also have program managers and business analysts whose job is to get into and understand these strategies,” Johnson says. “That means meeting one another more than halfway each time.”

 

 

 

Dec. 1, 2014


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