<p>WEST PALM BEACH, Fla. – It's no secret that more and more credit unions are trying to attract business accounts, but many are finding that their core data processing systems aren't rigged to handle them. Business lending and the servicing of business accounts are on the minds and mouths of credit union people everywhere these days. Processors are getting the message loud and clear that they must deliver. Kevin Durrance, SVP and CFO for Georgia FCU, Atlanta, says his CU's processor, Symitar Systems, San Diego, is currently working on business account functionality and has set up a business advisory group. He's confident they'll come through soon, but until then Durrance says his CU can't go after large business accounts. "We're very anxious," he says. As a former banker with such big players as First Union, Durrance knows the in's and out's of servicing businesses, and one of the most important things he needs from the core system is a business sweep account with detailed reporting capabilities. "In a corporate checking account currently you can't pay interest, but what you can do is set up a sweep account. You sweep out their nightly balances and put them in investable instruments," said Durrance. "What they earned over night shows as an earnings credit, so during the course of a month that earnings credit can go towards covering their service charges." Durrance said years ago large companies demanded that financials compensate them in some way for their large balances in non-interest paying checking accounts – earnings credits were born. Ideally, said Durrance, the credits will work out to be very close to the fees the credit union is charging that business account. This way the commercial accountholder feels like they're getting something from the financial. Credit unions should want to keep business accounts happy, says Durrance, because they can help the CU in a number of financial ways. "At First Union we had the City of Tampa as a client. We were sweeping $10 to $20 million a night. The business ends up helping to subsidize your individual members. A business may keep a couple million dollars in your checking accounts, and technically you're not paying any interest," said Durrance. Money has to be swept back into the account in the morning to cover checks and other business costs. Sweeping isn't always about sweeping to $0. There can be varying dollar amount settings to have funds swept different places. He said he's trusting that Symitar's parent company, Jack Henry & Associates, which has been doing commercial account processing for years, will help Symitar get up to speed quicker than other processors. Gary Base, president/CEO of Community CU, Plano, Texas, says CUs getting the expertise on staff to service business accounts is hard enough (his CU has over 100 years business account experience on staff), but trying to find the systems to handle the accounts can be even a bigger challenge. "We have struggled for some time trying to find technology software that would go ahead and allow us to provide the level of service we needed for our business accounts," said Base. Base said his CU's processor, XP Systems, Moorpark, Calif., does have some rudimentary functionality that allows the CU to keep track of coin and currency and perform other basic commercial account functions, but the CU has to use a myriad of third party software providers to provide more complete service to its business accounts. For example it uses systems from FICS and Bankers Systems for business lending functionality. Bankers Systems has a unique lending solution that has all of the necessary state and federal business loan forms built-in. "These basic core DP systems are not as extensive as necessary. A lot more needs to be done with XP. XP is having a system re-written so we will be able to integrate these third party applications very easily into their product," said Base. XP Systems, a Fiserv subsidiary, is ahead of the game in many respects. A number of processors have absolutely no business capabilities built in. Still, John Edwards, SVP of Business Development for XP Systems, said XP knows it has a lot more to do. "It's a good basic solution that's going to get better with the implementation of XP2. I think what credit unions are looking for though is more detailed account analysis, account profitability analysis, more analysis on uncollected funds, more analysis on average balances – just overall more detailed reporting," said Edwards. The detailed analysis will help the credit union get a better feel for the impact business accounts are having on its balance sheet, he said. "We don't have the tools built into the system to say `hey this is a good account' or `this is an account that is costing you a lot of money.' " " Five or six years ago when you talked to credit unions, they didn't seem that heavily involved in account profitability and analysis, but things have changed. As they get more sophisticated with businesses, they're going to want more and more," said Edwards. Over at USERS, Valley Forge, Pa., another Fiserv subsidiary, the demand from clients has the processor looking for the quickest, most effective solution possible. "Two years ago we had one or two clients making a lot of noise wanting to do commercial processing. At that time we said there's nothing we can do for you -we cant' afford to stop what were doing to build something with such little demand," said John Schooler, SVP of Business Development for USERS. But oh how quickly things change, said Schooler. "It's grown from two to 30 or 40. They think they've hit some limitations about how much more they can penetrate their current field of membership," he said. Schooler said the Fiserv processors have been getting together to try and find the quickest way into this game, and Schooler doesn't think developing it in-house is the way to go. "To build this type of software package would literally take tens of thousands of research hours. I realized building it ourselves was not going to be a solution. We are negotiating to offer one of the Fiserv banking packages in service bureau mode," said Schooler. Will CUs go for servicing member accounts within the core system in service bureau mode at another site and on another system? Schooler said the systems will be integrated, and it's no different than what most CUs do for credit card processing or with third-party mortgages. Schooler said beta sites will be up this summer at USERS clients. "That was another reason to go this way, time to market is critical." Mike Nicastro, vice president of marketing for Open Solutions, Inc., Glastonbury, Conn., said disparate systems are not going to cut it for business accounts. "That's a Band-Aid approach, but it's not a long-term, viable approach. I can't imagine credit unions not getting frustrated with this approach as they become more aggressive. Everyone is talking about CRM. How are you going to do really good CRM with separate systems? Trying to get a profile of your client will be difficult. One system runs on HP, one system runs on ClearPath. They don't talk to each other and at the end of the day the member is going to get frustrated." Nicastro said he wouldn't want to be in the shoes of other CU processors that are just getting into this area. OSI is fortunate, he said, because the system was born out of community banking, so it has lots of business functionality built in. "Ninety-percent of what a credit union needs is already in the system. There are some big add-on pieces they can buy. For example we don't bundle in our cash management system," he said. OSI is one of the few processors to have its own cash management solution. Symitar Systems' Director of Product Delivery Zandy Reinshagen said Symitar could have chosen to interface to a Jack Henry subsidiary for commercial functionality, but doesn't think that's the way to go. "We weren't really too jazzed about that as tightly integrated as credit union systems are. We consider that's what makes credit union systems so much better," she said. Symitar will use Jake Henry expertise and take the project in phases, with the initial phase dealing primarily on account analysis. It will be account analysis both for the credit union to manage the account, such as calculating the earnings credit, but also for the member to see the basics of its account. Reinshagen said it's so important for credit unions to be able to analyze business accounts because it helps them customize a relationship. For example, a CU may want to waive certain fees for a new business or an already very profitable business account. The business account will also get an account analysis statement in addition to their normal statement. Reinshagen said this functionality should be included in Symitar's release. Most interviewed for this story said cash management is a piece of the pie CUs will need to effectively service business accounts, but it likely won't come from the core processors just yet. Cash management is essentially the equivalent of Internet banking for members. In the old days, businesses, depending on their size, would want daily or weekly reports on their accounts. Now, according to Jamie Deterding, e-commerce product manager for ITI, a Fiserv banking processor subsidiary, businesses want real-time access. ITI recently launched PremierEcorp, a browser-based, real-time commercial Internet banking solution. It allows businesses to make internal and external fund transfers, manage stop payments, access check images, view archive statements, view tax and loan statements, and sets access levels at varying levels for employees. Deterding said for credit unions that haven't served business accounts before, flexibility and reporting is the name of the game. He said credit unions have to learn about business cash flow to do effective business lending. A golf course for example may see strong cash flow in the spring and summer, but in fall and winter it drops significantly. This could lead to a business loan where the business either has a skip payment plan, or only pays interest in its down months and principal and interest in its cash-flow rich months. These are loan terms that CUs just don't see on the consumer side, said Deterding. Sooner or later credit unions are going to want to participate these business loans which puts yet more demand for enhanced core processing functionality, said Deterding. Credit unions are wise to enter the business space because that's where the profitable accounts are, according to Deterding. "Consumer banking is a giveaway. Where the financial institution finds their most profitable customers are their commercial customers. And I'd love to say it's all tied to product, but it's service, service, service that clients want. The more information you give the client, the easier it is to service them," said Deterding. Internet solutions firm Digital Insight has made quite a splash with its cash management solution. Originally designed for its banking clients, Digital Insight leaders say they have been pleasantly surprised by the interest from the credit union space. If processors need even more incentive to get on the business bandwagon, here it is. The Small Business Administration is working to find ways for CUs to do more SBA-backed loans, and there are murmurs that the 12.25% member business lending cap may be raised if certain CU trade associations have their way. -</p> <p>[email protected]</p>