Many credit unions are exploring their item processing options largely due to ongoing corporate CU turmoil and uncertainty.

After 40-plus years of serving more than 400 credit unions, we've discovered conversations with potential new customers all seem to have a common theme: Flexibility. If you're considering outsourcing item processing, here are five questions to ask would-be providers, and why:

1) Settlement Options: Do you have the ability to settle anywhere? If not, find someone who can. Access to exchange networks is key. It's much less cost effective going solely through the Federal Reserve and can have substantial implications on employee costs. The credit union will have to be much more involved in the returns process and other processes that an outsourced solution handles.

2) Volume: What kind of volume do you handle and what kind of cost savings does that mean to me, regardless of my size?

3) Software: What platforms do you support? Getting locked into an inferior software platform can have substantial cost implications as a result of inefficiencies on the teller line and possible balancing issues.

4) Price: Does the price you quote include all processing fees? Some processors charge for image access, have minimum monthly fees/hidden monthly charges and differ based on volume. When was the last time the company decreased prices based on operating efficiencies?

5) References: Can we speak to any of your current customers, not just a select list? It's what the one not on the list says, that you should pay attention to.

Processing your member's share drafts and deposits should not be contingent on capital positions and settlement relationships.

Above all, item processing should be handled by a partner that knows how to serve credit unions and has a well-documented track record of finding the most efficient and cost-effective solutions.

Ed Culpepper is CEO of Palmetto Cooperative Services in Irmo, S.C.

Instant Insights /

Flexibility Key Driver in Item Processing Partner Decision

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