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NEEDHAM, Mass. -A new study by the TowerGroup on the credit union data processing market concludes that credit unions are more willing than commercial banks and thrifts to replace their core systems. “This willingness can be attributed in part to the CUs’ need to offer new functionality and in part to the fact that CUs have few branches and smaller numbers of staff to train than do banks and thrift institutions..” the report states. Because credit unions are overall smaller than banks, a conversion is less complex, the report concludes. Other findings include the following: * CUs are demanding new functionality from their core processing vendors, including business loan and member relationship management capabilities. * Fiserv, with nine core system offerings, is the dominant vendor. (Editor’s Note: TowerGroup erred and omitted three core Fiserv systems, all three from CUSA Technologies. Fiserv actually offers 12 CU core systems.) * The core systems vendor market continues to consolidate, and the five leading vendors now hold a combined 64% market share. * An estimated 70% of CUs process their core systems in-house; the remaining CUs use outsourcing services for processing customer accounts. The report cites Fiserv as having 32% market share. It also notes that five leading DP vendors -Fiserv, FedComp, Fidelity, Open Solutions and Harland – account for 64% of the market. New vendors trying to emerge on the U.S. credit union DP scene are identified in the report. These include Fincentric, working primarily with Canadian CUs now; I-Flex, and Temenos, both of which are in the international banking market. According to the report, the credit union market is in essence two markets for vendors. There are the 7,500 CUs with less than $50 million in assets, which tend to run in-house systems on a Windows platform. Then there are the largest CUs, including 26 CUs with more than $2 billion in assets. The very large CUs typically run systems on a Unisys mainframe, midrange Hewlett-Packard platform, or IBM zSeries or iSeries platform. The following charts detail more findings from the report:

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