Market Share And Opportunities In The Core Systems Space

Large players at the top of the market aren’t the only providers making gains as forward-thinking small providers enter the scene.

 
 

The core systems marketplace for credit unions has evolved throughout the past year with many changes mirroring activities occurring at the larger industry level. As such, Callahan & Associates designed the 2015 Market Share Guide to Credit Union Core Processors to better prepare credit unions for changes to their core processing systems.

The major core processing providers continue to enjoy a sizeable market share, as they battle to earn new business from the limited pool of high-asset credit unions. However, new market entrants have captured market share from smaller providers and major players alike. Some new participants have built a respectable business within the financial cooperative industry.

Sam_Intro_1

Many providers are growing market share by single and even double-digits; however, activity such as mergers, purchase and assumptions, and liquidations in the credit union space has decreased the number of financial cooperatives by 258 in the past year, of which 236 were mergers. Consistent with recent years, the reduction in the number of credit unions can shift market share figures, creating the impression of negative growth. Additionally, the acquisition of small and mid-sized core processor providers by larger peers means the same process of consolidation that is shrinking the credit union industry is also decreasing the number of core providers.

During the past year, total assets of credit unions grew 4.5% to $1.1 trillion. As such, the aggregate asset size of many core providers’ credit union customers also increased during the period.

At the top of the market, much media attention has been directed to the ongoing competition between Fiserv and Symitar. However, many credit unions are keeping an open mind in selecting a provider, as evidenced by newer, and sometimes smaller, providers fighting equally competitive battles with one another.

2013-2014 Customer And Asset Change Comparison*
© Callahan & Associates | data as of 06.30.14

Core Provider Change # CUs % Change # CUs Change In Assets % Change In Assets
EPL, Inc. 10 14.1% $2,168,039,895 48.5%
Corelation 9 112.5% $2,617,742,164 232.9%
Enhanced Software Products, Inc. 6 18.2% $299,614,810 20.8%
CU*South 5 19.2% $193,121,142 31.8%
Synergent Corp. 5 9.3% $618,263,333 10.7%
AMI, Inc. 3 2.5% $515,217,766 40.5%
CU*Answers 3 1.8% $1,625,660,560 12.1%
CU*NorthWest 3 11.1% $39,539,688 4.7%
Member Driven Technologies 3 3.8% $1,537,577,184 14.9%
COCC 1 3.4% ($645,612,420) -11.1%
CU-Centric 1 3.4% $18,940,686 2.5%
* Excludes providers who did not verify clients for 2013.

Many companies enjoyed marked success in 2014. EPL and its i-Power platform increased the number of credit unions served by 10. But not all core providers’ customer bases increased in 2014; for example FedComp lost 56.

In terms of increasing customer aggregate assets, Corelation made the largest strides of core processor providers in 2014, increasing its customer aggregate asset size by $2.6 billion from June 2013 to June 2014. EPL also significantly increased its customer aggregate asset size, growing from $4.5 billion to $6.6 billion during that period. Although many processors enjoyed overall customer aggregate asset increases, several experienced year-over-year declines. The aggregate assets of COCC’s credit union customers declined $645 million, and credit union client assets at Electronic Recordkeeping Services declined $267 million.

UltraData is touting signings under its new ownership, Canada-based Davis+Henderson. Fiserv is reporting traction replacing its extinct Acumen platform with its newly acquired DNA solution. Symitar keeps signing billion-dollar credit unions to its Episys platform, which had the most assets under management at $313.9 billion. Second: DNA at $121.5 billion.

So, who’s king of the hill? Fiserv has 2,221 credit union core processing clients, by far the most. But the most on any single platform? That would be small credit union specialist FedComp at 759.

The credit union core processor industry will continue to evolve as the changing marketplace of the credit union movement also changes. The well-known, large players will likely still grapple for market share at the top of the market, and opportunities will continue to exist for innovative, forward-thinking small providers.

 

 

 

Dec. 1, 2014


Comments

 
 
 
  • These numbers seem to be much more accurate than those presented during the past few years. Some vendors who choose not to participate in past surveys, nonetheless found numbers placed in the final publication under their names, seemingly pulled out of thin air.
    Daryl Tanner
     
     
     
  • Very helpful - thanks for posting this. What I find interesting is how few of the core processors make a showing at any of the CU trade show events.
    Jeff Chandler