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MOORPARK, Calif. – After an intense development process of its next generation system, credit union data processor XP Systems says it’s learned a lot about its credit union customers – mainly that they know what they want from a system, and they’re willing to work for it. XP Systems is now in distribution with XP2, its new system that features a relational IBM DB2 database; Internet based-software apps built in with Microsoft .NET development tools; and it operates on the affordable IBMpSeries hardware platform. The new system will eventually completely replace the existing FOCUS XP system. But XP Systems didn’t do this alone, it’s customers played much more than just a surface role. “We’ve always sort of taken credit union input on what we should be working on, but we took it to a different level in that the bulk of the design work was done at the direction of our customers,” said John Edwards, SVP of business development for XP. Edwards said the processor was a little wary that it might not get enough CUs to volunteer to help XP, given that it wasn’t going to pay their way out to XP in California to work on the design, nor was it picking up the hotel bills. “We told them we’d feed them, but the hotel and air travel was on their time.” XP held nine design sessions: three on concept design; three on functional design; and three on technical design. Some 60 to 70 CU professionals showed up for each of the nine sessions, said Edwards. Edwards admits he was a bit surprised about just how sharp some of these people were, and how clear they were on what they wanted from the system. What did they want? Openness of course, but also a system that could be a relationship builder. “A lot of our CEOs are saying the battle with the banks is really just beginning. Banks are getting much more aggressive with relationship management -taking care of their best customers. And they’re content to leave their marginal customers to other institutions,” said Edwards. XP clients told XP they want to take maximum advantage of the relationship they have with all their members, but treat the profitable members so well they won’t lose them to another institution. To do that they system has to be heavy on the relational side, said Edwards. What clients seem to be most impressed with to that end is the system’s Product Configurator. It allows the CU to tailor a product suite specifically to an individual member. Chris Barbour, VP of Finance/IS at Government Employees CU of Maine said the Product Configurator gives the CU a lot of relationship flexibility. “Say you had a member who did a lot of electronic banking. You could design a product for them, maybe a certificate, using the Product Configurator, that gives a higher rate because they do all their activity electronically,” said Barbour. “Or you could configure something where if a person has a checking account and overdraft protection on a loan, that could be criteria you use to give a lower rate on a new loan.” Edwards said the CU can also use the Configurator to link products. For example, if a member opens a share draft account, the Configurator will prompt the member service rep to offer the member a debit card. One area the configurator might give CUs a big edge, said Edwards, is in its ability to even customize rates. “If a member calls and says he wants to deposit $100,000 in the money market and was quoted say 1.85% by the bank down the street, the service rep can go in and set up that account with say 1.86% relatively easily,” said Edwards. He noted as long as the parameters are there for the MSR to follow, such as a rate range for high deposits, it’s something they can do on the spot. The strength of XP2 says Edwards is it’s built with a component architecture. Like a set of Legos, a component based architecture lets the credit union build things without having to change everything else in the system, said Edwards. “A component could be interest computation on a consumer loan. When you want to do some work on that, you just grab that component, do what you want, and you don’t need to worry about the effect it will have on the rest of the system. That increases the shelf-life of a system.” Another benefit of a component architecture, said Edwards, is if the CU has the technical expertise they can reassemble the component themselves to a certain extent. Creating a new system is not an easy task, right down to the legal work. “I spend about one-third of my time with attorneys, working out the parameters of licensing agreements,” said Edwards. He said XP felt the new system would be a good opportunity to get everybody on the same agreement. “No good deed goes unpunished. They all (CU clients), and rightly so, have their attorneys review them and want to negotiate certain terms and conditions,” he said. About 50 of XP’s 300 CU clients are now on the system. Another 25% will convert with the processor’s second release which will be debuted at its client conference in Rancho Mirage this week; and the final 25% will convert after the third release. [email protected]

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