If you’re a credit union CEO or manager – or anyone other than the head of IT – you probably don’t spend much time thinking about the architecture of your core system. That’s unfortunate, because your system architecture has a direct impact on your business and your ability to succeed. No matter what your business goals – to operate efficiently, meet changing regulatory requirements, improve member service, increase product penetration, and so on – the right system architecture is essential to achieving them.
A progressive system architecture includes several important characteristics. The first is a service orientation. Forget about complex technical definitions: simply put, a Service-Oriented Architecture is a collection of business tasks or services that work together to meet the needs of the system end user. Consider a service we’re all familiar with: the phone service. You pick up the phone, dial a number and reach another party. It doesn’t matter what type of phone you call to or from (whether cell or land line, cordless or corded), or where the other person is located. The underlying architecture – a Service-Oriented Architecture – ensures that the different devices using different providers can interact. As the end user, all you experience is the seamless delivery of the service you expect.
Some vendors will claim that the only viable way to get different credit union systems interacting seamlessly is to require them to use the same data model or database structure. Not only is this entirely unrealistic; it’s also entirely unnecessary. With a Service-Oriented Architecture, the various vendors involved don’t need to use the same database; they only need to agree on how to interact. Once they do (typically by using common industry standards), the credit union end user obtains exactly what he or she needs – a system application that is simple to use, no matter how complex the systems involved may be.
Gaining a seamless presentation of data is vital throughout the organization, across all of your business processes. Consider the once-simple act of opening a new account. Today, it might require separate systems for OFAC compliance, Patriot Act compliance, check ordering, signature cards, plastic cards, credit bureau inquiry, and other functions. Your employees don’t care what takes place behind the scenes; they just want to complete the process quickly and accurately. A Service-Oriented Architecture allows them to do that, by presenting a single, composite application that is easy to use.
Another critical element of a progressive system architecture is the right database. Relational databases were once considered a must-have, but they’re limited in that they only store data in two dimensions. While they are ideal for data that fits neatly into tables of rows and columns, the real-world is much messier – and so is much of the data used in credit unions. Your data tends to have complex interdependencies, the kind that relational databases don’t handle well. Instead, a post-relational, multi-dimensional database is ideal for the real world in which credit union data exists. Such a database will give you the best of all worlds: speed and performance for processing complex transactions, greater analysis capabilities (something your finance staff will appreciate), and full support for off-the-shelf reporting tools like Crystal Reports.
Another important element of a strong system architecture is a browser-based interface. As the name implies, browser-based interfaces display data through the familiar browser that we all know thanks to the Internet – making the software extremely easy to learn and use. Browser interfaces have gotten a bad rap lately, fueled by suggestions that a browser-based application on the front end surely must be hiding something ugly on the back end. But the two don’t automatically go hand-in-hand. A browser interface can and should co-exist with robust software on the back end. So before you dismiss a browser-based solution, take a careful look to see what’s truly behind the scenes.
Finally, a progressive system architecture won’t require you to hire costly programmers or database administrators. If a core provider adheres to common industry standards, then the data in the system will be accessible by the credit union’s existing staff – greatly reducing your ongoing costs. End users will be able to access much of it themselves from their desktops. And your IT staff will be able to do the rest, using affordable, off-the-shelf applications to create reports and other data queries. It’s the difference between buying a house or buying the raw materials and tools to build it yourself. It’s hard to imagine that many credit unions would willingly place themselves in the latter camp.
The good news is that progressive system architectures exist and are already helping credit unions improve their ROI and achieve other tangible benefits. So don’t ignore your core system architecture. Make sure you’re partnering with a provider that offers the right architecture, understands the credit union industry, and is committed to it for the long haul. If your core system architecture isn’t supporting your business goals, you might want to take your business elsewhere.