re:Member Data CEO sees CU data processing go back in time

INDIANAPOLIS - Core data processing has evolved over the last 20 years in a number of ways, but as an industry, credit union data processing has gone back in time in one respect. Twenty years ago there were only a handful of independent credit union data processors. Back then CUNA and a handful of large banking processors, including large banks themselves, handled the bulk of the credit union industry's data processing needs. After a plethora of new credit union data processors emerged in the `80s and `90s-Symitar Systems, ULTRADATA, and C.U. Processing to name a few-the industry became more segmented and more competitive. But consolidation has ruled the day for the last five years as processors began gobbling each other up. "I think the basis is multi-faceted. It's the nature of the industry. The big corporations need to continue to grow. By far one of the easiest ways to do that is by acquisition," said Dave Becker, CEO of re:Member Data Services, one of the few remaining independent processors exclusively serving credit unions. Becker, who founded re:Member Data in 1981 at the age of 27 after working as a senior consultant for the Indiana Credit Union League, said he started re:Member Data to give credit unions a choice. "Back then, as most leagues had in those days, we had an endorsed vendor. They were a banking processor. We were fighting data processing issues day in and day out," said Becker. Becker took one computer class at Depauw University in 1981. He admits he couldn't write a line of code if his life depended on it back then or today, but he said he understood the industry and the need for more credit union processors. "I guess in the near term I don't think that consolidation is necessarily bad right now. It gives smaller firms additional resources and tools. But over time there will be some bad feedback. When you're a Fiserv and have six different credit union products, ultimately one has to survive. You can't support all of them. There will be consolidation." There are advantages to being an independent processor, said Becker. "The greatest single advantage we have is reacting to the marketplace. We can make business decisions fast. We don't have to go to committee and look at our budget 18 months down the line. A few calls to some vice presidents and we're ready to act." Becker said another reason for the mergers is that executives start getting further along in years professionally and selling their company becomes a more realistic exit strategy. At only 47, he said he is having the time of his life and has no plans of entering the CU data processing merger mania, though he said he gets a call every 90 days or so from a company interested in re:Member Data. As for other trends, Becker said the service bureau model is starting to become more popular. "We saw nine or 10 of our clients move back to the service bureau concept. It provides more flexibility. Credit unions have enough to worry about building their business, they like having the service bureau worry about changes in technology." He also said IT staffing shortages support the service bureau model because it doesn't require the CU going out and hiring skilled IT professionals to run their in-house system. Improvements in telecommunications are also on the side of the service bureau. "More data can be pushed out today using TCPIP. It used to be a large query of say 200 MB on a 9600 baud line could bring the system to a screeching halt. Now there's no impact when moving large chunks of data," said Becker. The new openness of the industry was unheard of back in the early `80s, said Becker. "I think the biggest change over the last 20 years is a change to open standards. The old proprietary services and the idea you buy it all here, or don't buy it all is gone. It's much easier to buy a product for a specific service-mortgage origination-Net banking and tie it back to the core processing system." Becker knows a thing or two about being a third-party trying to sell a product that ties into a CU's core DP system. He is also the founder and chairman and CEO of Internet solutions provider VIFI. VIFI provides a suite of financial-related Internet solutions. The company currently has approximately 100 credit union clients. Looking ahead, Becker said credit unions better stay abreast of competitors that are not traditional in terms of the competitors they're used to. "They've always gone head-to-head with financials down the street. Now credit unions have to worry about America Online. There's a whole new breed of competitors that is looking at aggregation through portals to get customers." -pgentile@cutimes.com