Excerpted from the 2004 Credit Union Directory, on sale now!
The success of a credit union's strategy is dependent on its ability to use technology effectively. While the IT requirements of a credit union are much more comprehensive than just the host system vendor, that provider often determines the framework and integration options that can be added.
In the realm of financial services, credit unions are small. Only a handful of larger institutions have developed and maintained their own data processing solution. The other 99% rely on third party providers. Because credit union investment in brick and mortar has been relatively limited until recently, the focus on remote delivery, self service options and network integrations has been correspondingly greater. The capability of the vendor to develop and deploy self-service and networked solutions is strategic for every credit union.
Credit unions in all asset ranges are fortunate in having a wide range of options for third party vendors. Over 90 firms serve the market. No single solution is dominant across any one segment. There are also a variety of organizational alternatives. While the majority of vendors are owned by public companies, there are still a number of private firms and a small number of providers have credit union ownership. In addition to the host system vendors, a growing cottage industry of supporting applications is being created by credit unions around some of the vendor platforms.
While the market for data processing is the primary focus of IT stories and investment dollars, broader core products continue to be installed. These include the whole range of Internet functions home banking solutions and bill pay, document imaging, wide and local area networks, and high speed communication interfaces.
Every credit union continues to increase their investment in security, networks, business continuity and redundancy processes. Increased training, documentation and upgrade requirements accompany every process and new application.
IT is a critical competency for building competitive advantage. As more and more data becomes digital, all credit union processes become virtual. No more paper is needed as traditional transactions, lending and reports become digital. Even teller and call center conversations and proactive marketing offers become part of the IT processes.
While there will always be aspects of the credit union's presence that is physical such as--branches and ATM's--members will increasingly expect to activate their relationships anytime and anywhere -a promise made feasible by the Internet. Credit unions will continue to rely on DP companies that can help them realize this opportunity.
For more on host processor market share, operating expense data and other e-business initiatives, check out Callahan's 2004 Credit Union Directory and Callahan's Credit Union Technology Survey.