The landscape of credit union core system technology over the past three decades has evolved to include major foundational support with mission critical third party products such as Internet and Mobile Banking, Loan Origination Systems, CRM, Business Analytics, etc.
All credit unions will be faced with an inflection point where their total technology for products needs a makeover. So often, the decision is made to change out the core system and, by the way, we might as well change out most of our third party products while we are at it. Hence, the “Big Bang of IT.”
The “Big Bang” approach is not only disruptive to overall CU operations, it is also stressful to staff and, oh yea, the members! But today, we live in a “must adapt in a nano-second” world of catering to the “When I want it” crowd.
From the time that a credit union begins a core due diligence search to finally overcoming the hangover of a new core, a span of up to three years can pass. Will your members wait that long for a new app? If a Millennial won’t spend more than 90 seconds filling out an online loan application, I doubt this three year wait thing will work.
Progressive Renovation of IT actually places the core change on the back burner. Instead, the credit union concentrates on member-facing products and productivity services to enhance member services.
Overriding The Cost Objection
Whenever Progressive Renovation is first approached, the immediate objection is this will require another interface to our core, which is expensive. So why not make a core change first? Then we only pay for the interface to the new core system. Response, “Yeah, got two or three years to wait?” Factor in the member and business defection into an ROI and one will quickly see that “time to market” in today’s climate overrides the interface cost objection.
Surprisingly, once a credit union follows the path of Progressive Renovation the need to swap out the core most often diminishes. Core systems are now being thought as “database engines.” This thought is confirmed with the trend over the past three decades of fabulous third party member facing and productivity systems.
As a final thought on the Progressive Renovation approach – this will have an immediate and positive impact on members. In today’s world, all of us expect technology to change and those companies that do not embrace change are being left in the dust.
Oh, for those credit unions thinking a core change is mandated, is it because you have not attended a core client conference in 10 years? Is it that you are upset that your account manager does not pay enough attention to you? Do you think you are being nickeled and dimed to death? Often, just getting your core vendor’s management team in a headlock to resolve these issues will be less painful than deconverting to teach them a “lesson” aka, “look inward first.”
Find this article on CUToday.info.
