A wave of outsourcing may be heading toward the corporate credit union sector. That at least is the hope of Murthy Veeraghanta, CEO of VSoft, a Duluth, Ga.-based provider of computer processing to hundreds of financial institutions, a number that just grew by one with the signing of a deal that shifts Warrenville, Ill.-based Alloya’s back-office item processing to VSoft.
At Alloya, Senior Vice President Kevin Brauer indicated the corporate’s intent is to outsource many more such services. “We want to align ourselves with the best of breed,” he said. “Our goal is to get out of the manufacturing businesses,” referring to commodity processing. “We are all about member service. Our core is in the aggregation of products and services so that members can get a good price.”
Veeraghanta pointed out that corporates today may find it advantageous to reduce the size of their balance sheets and, with VSoft, a corporate that outsources its processing “is able to provide services at minimal operating costs and practically no capital costs. That is the advantage we bring.”
Brauer elaborated that Alloya anticipated the VSoft deal will result in multimillion dollar savings for the corporate.
A cornerstone of the pact is that VSoft agreed to employ the Alloya staff presently engaged in item processing. “They are rebadging the employees as VSoft,” said Brauer. “This positions VSoft to be able to serve credit unions in the ways they are used to being handled.”
As for how VSoft will affect cost savings, Veeraghanta said, “We have the advantage of scale. Our operating costs will increase marginally, our revenues will double.” He added that Alloya and its members may also benefit from advanced services in the future, such as remote-deposit capture, that are already in the VSoft portfolio of services.
Veeraghanta added, “We hope other corporates begin to see the advantages of outsourcing.”
“This partnership with Alloya makes perfect strategic sense for VSoft,” Veeraghanta added. “By further aligning itself with an industry leader with a large membership base, VSoft will be able to leverage its relationship with the corporate to bring future products to credit unions, while providing a profitable platform from which to serve others in the marketplace.”