There appears to be inertia within the credit union industry in regard to undertaking a core processing conversion.
The time investment required to select a core processor and complete a conversion makes it unlikely a credit union will embark on the endeavor very often. The task is so daunting that even when necessary, a credit union might put it off.
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From 2014 to 2016, approximately 10% of credit unions converted their core, according to data from Callahan & Associates. Interestingly, there appears to be a relationship between the conversion rate and credit union asset size.
Credit unions with $100 million to $250 million in assets were 2.5 times more likely to convert than any other group. Credit unions in this range account for approximately 12% of all credit unions, yet they represented 43% of all credit union core conversions during the three-year timeframe Callahan studied.
CREDIT UNION CONVERSIONS BY ASSET CLASS
FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.16
© Callahan & Associates |www.creditunions.com
Source:Peer-to-Peer Analyticsby Callahan & Associates
One explanation for the jump in core conversion activity could lie in the increasing operational complexity and expanded product offerings inherent to credit unions in this asset class. Once a credit union hits the $125 million threshold, it is more likely to be planning to add members and service offerings in the coming years, and increased service offerings typically necessitate a more powerful core processor.
Is It Time For A Core Conversion?
It's important to know which core processors are making a difference for credit unions in your market and asset range or with similar business models. Callahan offers this, conversion best practices, and more to help you make your big decision.