This article was originally written and posted by CUToday.info.
TALLAHASSEE, Fla. — More CUs, large and small, are outsourcing a growing number of IT functions—if not the entire staff and computer room—according to one CU technology solutions provider.
United Solutions said the shift is happening due not only to the cost and complexity of emerging technology, but also due to increasing cyber-security compliance demands.
“Credit unions are spending so much money on security and compliance technology now that I don’t think a lot of them have budgeted for,” said CEO Jim Giacobbe. “These products can be costly. And when credit unions find out how much they cost it can get overwhelming very quickly.”
Denny Gillott, SVP of sales, said the movement to outsource is being seen in things as big as the core system to other things as small as hosting the e-mail service. But he does see small credit unions facing the biggest challenge when it comes to addressing the growing price of cyber-security.
Gillott said examiners are asking all credit unions to invest more in data logging and monitoring technology.
“I am aware of instances where the examiner audits one credit union that has invested a lot in cyber-security, and all the reports the examiner receives are very detailed,” said Gillott. “Then that same examiner goes into the next credit union and expects to see the same level of detail.”
It's About Focus
The shift to outsourcing among larger credit unions, Giacobbe added, is less about cost and more about focus.
Jim Giacobbe, United Solutions
“We are seeing the trend where credit unions, $500 million in assets for example, say they are realizing they need to get back to running the credit union and not an IT shop. They say they are not an IT shop and not security experts. Some are looking at their computer rooms, questioning whether they still even need to have that in house and keep high-paid staff to manage it.”
Giacobbe said tech investments, among the savvy CUs, are headed to member-facing technology, such as mobile deposit capture, optimizing the website for mobile, and upgrading the internet banking platform.
“They realize they need to invest in what members are looking and asking for. It kills me when I talk to a credit union and they say we will wait to see how a technology develops—and then they either come in way late to the game or don’t even enter the market with some of this stuff.”
Credit unions, too, are paying more attention to independent lending platforms.
“A lot of credit unions are saying that the lending platform that comes with their core system is OK, but now they need more,” said Giacobbe. “They are saying we want to become more efficient with lending, do much more online, and are looking outside of what they already have.”
Business Intelligence Giacobbe said CUs are also spending more on business intelligence applications to make greater use of member data.
“Even the smaller ones,” said Giacobbe. “They realize to compete that they need some sort of business intelligence solution for the credit union.”