GLASTONBURY, Conn. – Macroeconomics and core processing don't often share the same sentence, but they come together when Louis Hernandez explains why he thinks his company and industry are having a fairly good year. "While we like to take credit for having great products, the macro trends of our industry are driving our growth, too," says the chairman and CEO of Open Solutions Inc. "Our company is growing about 60% this year, and much of that has to do with the competitive landscape," he says. "Adding new products and services quickly and efficiently is becoming more and more important to financial institutions, and so is their need to know more about their members immediately, regardless of the channel." Hernandez said the credit union channel is one that OSI is working hard to deepen. The decade-old company, which expects to see revenues jump from $27 million last year to about $45 million this year, has about 1,500 clients, of which 200 are core-processing relationships. About 20 of those are with credit unions. "But about 40% of our backlog, representing about $50 million in signed contracts, are with credit unions, and about 60% of our current prospects are credit unions, as well," Hernandez says of his 280-employee firm. OSI is a core processor, but with its open, member-centric architecture driving an enterprise system that also offers such things as data mining, loan support and relationship pricing, from OSI or elsewhere, there are times Hernandez also sounds like the head of a firm specializing in customer-relationship management or new-business development or other FSI specialties. That's no accident, he says, given his company's wide range of product offerings and the access the platform offers to others. "Our core architecture is completely open. Whether you're a $20 million credit union or billion-dollar bank, our core system is the same. Every component is built around a normalized, relational database, and information goes right into the core, instead of separate databases," Hernandez says. That allows clients like Bellco Credit Union to quickly add a trust department and the Evangelical Christian Credit Union to run a college-tuition program and fund the building of churches while operating in 93 countries, from exactly the same platform serving the business clients of a billion-dollar bank and the share accounts at a $20 million CU, Hernandez says. Meanwhile, in a year when IT spending has been flat or declining, financial services as a whole are spending 4% to 6% more this year, despite "traditionally, along with insurance, being one of the slowest sectors in adopting new technology," Hernandez says. "Ours are about the only businesses left where you see such a significant investment left in things like mainframe and COBOL." Open systems like Open Solutions', of course, are at the opposite end of that spectrum. Based on "person-centric" Oracle relational database, OSI's core system allows integration with third-party solutions of all kinds, keeping best-of-breed shoppers happy and enabling users to quickly add new products and services without going through a middleware connection to a CRM or other platform, the company says. "We offer a pretty wide suite of products for credit unions, and what's intriguing to them is that most credit unions compete on better service, trusted relationships and community affinity, and all we're doing is upgrading the tools they can use to make those attributes more obvious to the member," Hernandez says. There's the macroeconomics again. "Credit unions serve people who want better service, more trusted relationships, and feel an affinity to their credit union because of demographics or geography," the OSI chairman adds. "They're an absolute cornerstone of our capitalistic system, just one more reason I find it so exciting to work with them." Noting the sharp growth in credit union assets, Hernandez says the industry's leaders now have as their number one challenge capitalizing on their unique relationship with members in the face of competition from all sides. "When we talk to credit unions today, we tell them they need to be deciding whether they need a partner with a common vision. Their competition isn't just banks anymore, it's E*Trade and insurance companies and credit card companies, companies that are interested primarily in increasing wallet share and fees," Hernandez says. "Credit unions are nearly just the opposite," he continues. "Their relationships run deep. They often start off with people who have fewer choices. And as those members gain more choices, they want to stay with that relationship, if the credit unions can offer them what they need," he says. "The challenge for credit union CEOs and boards is to figure out strategically what technology can do to help do just that," he says. "We feel by putting the tools in the hands of the leaders of the credit union movement, we're enabling them to demonstrate over and over again why people go to credit unions in the first place," Hernandez adds. "You can debate whether we do it successfully, but that's everything we're trying to do," he says. Of course, Hernandez argues that open systems like OSI's offer the scalability and range of options that credit unions need to efficiently compete, but also concedes that it can be hard for the hard-pressed, non-technical CEO and board to determine just what is "open." "We sort of laugh about it here sometimes," he says. "If all these systems are open, we must be really, really open!" But, he concedes, "There's so much noise out there right now about what technology can do for you that it can be hard to filter. "Ultimately, however, the technology you choose should automate the lower-level functions so you can spend time on the higher-level functions, which usually are human interactions. "And that's at the heart of what credit unions do. It's an exciting business, and I'm sure that with the right tools, the credit union movement will not only survive, but will thrive," Hernandez says. -

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