Corporate system getting deeper into Web-based technologies

OVERLAND PARK, Kan. - A new tech vendor breaks into the credit union industry seemingly everyday, but the tech powerhouses of the future may come from an old CU player-the corporate credit union. Corporate after corporate has unveiled some type of new Web-based technology product over the last few years. Many of these products are designed to give CUs more efficient tools for dealing with their corporate, but corporates are even offering products, specifically check imaging and Internet banking, that their member CUs can offer their members. "I'm sure there's mixed feelings in the industry about corporates offering e-commerce products, but it's an industry issue. Credit unions are in the fight for their lives. They're in one of the most competitive sectors of the whole online paradigm," said Charlie White, chief technology officer for Empire Corporate FCU. White said for credit unions to survive they have to embrace Web technology, but for that to happen prices of Web solutions must come down. White said major industry players like CUNA Mutual, the trade associations and the corporate system could join forces to bring the cost of Web-based technologies down. "Right now a lot of the leaders in the industry are doing things on their own. The industry isn't focused as a whole, but in the next couple of years as core competencies develop there will be opportunities for the players to join together," said White. White said when the industry has a good idea of who has the best product in a particular core competency (online stock trading, bill payment, online lending), those products should survive and duplicate efforts from other industry players should be phased out. Then all the leading products can form a complete suite of online solutions. He said that it's too early for that to happen because it's not clear who is leading in what competency. Judging by U.S. Central CEO Dan Kampen's emphasis on technology, U.S. Central seems to have taken the Web issue personally as an area where it must provide leadership for the rest of the corporate system. "Too many credit unions are waiting to see how the Internet will perform. It's been said that if you're just now thinking of entering the online business arena, you've already lost," said Kampen. "I think the corporate network has an obligation to help credit unions tap into the Web." U.S. Central's virtually unpublicized subsidiary Corporate Network eCom was formed to help credit unions get more involved in the Web, said Kampen. Very quietly, eCom has developed a suite of Internet banking and electronic bill payment services. eCom has an ambitious list of partnerships, including with Princeton eCom, Hamilton & Sullivan, Open Financial Solutions and Payment Systems for Credit Unions. One of eCom's flagship products is MemberStreet, an electronic bill pay service. The concept is for individual corporates to market eCom's MemberStreet to their members as if it was their own. GTE FCU, Tampa, Fla., was scheduled to go live with the product on April 12. Corporate leaders are embracing the technology role. "Seeing programs like electronic bill payment being carried out makes me proud of the corporate network's part in helping credit unions remain competitive," said Jim Taylor, president/CEO of Southeast Corporate FCU. Ohio Educational Credit Union,Cleveland, is the first credit union in Ohio to go live with MemberStreet. "I think the credit unions are more comfortable with getting these products from corporates. We're the ones who know about credit union rules and regulations," said Paul Hixon, communications manager for Corporate One. One of the problems for credit unions looking to bring more products to the Web is connecting the credit unions' front end applications with their host processing systems. To help CUs with that issue, at press time U.S. Central announced that eCom was acquiring middleware software from Open Financial Solutions, Denver, Colo., a CUSO formed in 1998 by Bellco First FCU, Boeing Employees CU, GTE FCU, First Technology CU, Orange County Teachers CU and Patelco CU (CU Times Sept. 2, 1998), to try and cut down CUs' systems integration costs. U.S. Central will acquire the Portal II middleware as well as the intellectual property of OFS and all OFS employees will be given the opportunity to work for eCom. At press time it was unknown how many OFS employees were going to eCom. Steve Tolen, president of Mid-States Corporate FCU said corporates have the economies of scale to bring new tech products to market at low prices. He doesn't buy into all the talk about the good feelings CUs have with their corporates as a reason why corporates can be tech partners. "The bottomline is credit unions want to get them (tech products) from the most efficient place in terms of price and functionality," said Tolen. Tolen said who partners with who is actually becoming a sensitive issue in the corporate system. He said corporates might go in different directions no matter who appears to be leading the charge. In the future Tolen sees corporates as full-blown tech partners with CUs, especially in the areas of networking and communications. "I think LANs and communications are two areas corporates can really leverage their tech infrastructure and assist credit unions." Some corporates have been as successful as many tech vendors in providing CUs with tech products. Mid-Atlantic Corporate FCU has 75 credit unions signed up for its bill payment product, which comes from FundsXpress, a vendor CUNA has partnered with. "It's a natural. Corporates are payment processors. Bill payment is just a new level of payment processing corporates are expected to do," said Leigh Philibosian, vice president of marketing for Mid-Atlantic Corporate. Technology products are also saving corporates money. Bob Fouch, executive vice president for Wisconsin Corporate Central CU said the corporate is saving money because of its 24/7 system that gives member CUs internet access to their accounts and the ability to do transactions such as wire transfers and ordering coin and currency. "It's definitely saving us a lot of money, but it also allows us to take our most precious resource, our staff, and direct them in different areas," said Fouch. Fouch said people may not realize how much time corporate employees used to spend on the phone taking orders from CUs. Corporates are also able to make the costly investment needed to offer the latest and greatest tech products. Bill Birdwell, WesCorp's chief operating officer, said WesCorp has upgraded all of its software, hardware, networks, and online access to make sure its wired for the future. One area WesCorp sees it helping CUs with is in the world of wireless communications. "We're looking at a lot of wireless communications, where the technology is going in the future, and making sure we can meet the needs of credit unions regardless of where they go," said Birdwell. He said many CUs may not have the infrastructure to stay current in the fast-paced tech world, but those CUs can leverage off WesCorp's infrastructure. Still Birdwell doesn't see corporates getting involved on all technology levels. "There are certainly some areas we don''t have any business being in. We are not a data processor," he said. -pgentile@cutimes.com