The emergence of self-service channels, such as the web andmobile banking, as well as transformative technologies like bigdata, electronic payments and remote deposit, have led the evolution of coreprocessing since 1990.

One essential element of the progression, particularly forcredit unions, was a shift from closed core systems to openarchitectures.

Open architecture core banking systems give credit unions theability to keep pace with rapid technological changes and incorporate best-of-breed functions across the branch, online,mobile and ATM channels.

Today's core processing systems must also have the ability toservice all channels 24/7 and seamlessly connect to a wide varietyof self-service solutions, as well as to more advanced personal andbusiness banking management systems.

“One of the key aspects of this change is the degree to whichcore processing architectures have become more open,” Keith Riddle,senior vice president and chief product management officer at theColumbus, Ohio-based, $3.7 billion Corporate One Federal CreditUnion.

Theresa Benavidez, president of the San Diego-based coreprocessor Corelation, noted, “An open architecture allows creditunions to implement just about any financial services technologyits membership demands, which opens the door to nearly anytechnology available.”

The movement to open core systems has been significant,suggested Riddle, given the pressure on credit unions to competewith larger financial service providers, very powerfulnon-financial entities and various verticals.

“Back in the day, the core processor was isolated and thirdparties didn't talk to it,” William T. Wittig, vice president/CFOfor the $205 million, Canton, Ohio-based CSE Federal Credit Union,commented. “Now everything is real-time and it all needs tointegrate with the core.”

Credit unions also used to take what the vendor provided. SantoCannone, chief product officer for the Brookfield, Wis.-basedFiserv's Credit Union Solutions division, explained, “If creditunions wanted to customize a function, techs went into the sourcecode and changed it, and not many folks did that.” Now, softwaredevelopment kits allow for the creation of additional products.

Application programming interfaces now permit credit unions ofall sizes to seek best-of-breed solutions, which allows them todifferentiate themselves in the marketplace and grow their memberbases, Riddle added.

Also, the rise of the Internet and connected computingdramatically altered data processing from IT and member experienceperspectives.

“Twenty-five years ago, there were no such thing as networkingoutside the credit union – everything was self-contained,” Cannonesaid.

Self-service channels – with the exception of ATMs – took off inthe 1990s. Before that, credit unions mainly adopted desktop PCsrun on Windows 3.1 for business purposes and knowledge of theInternet was limited, Ted Bilke, president of Symitar, a divisionof the Monett, Mo.-based Jack Henry & Associates, recalled. Heexplained if the member wanted to get cash, make a deposit or applyfor a loan, he or she would most likely head to the nearestbranch.

Cannone pointed out a credit union's most vital branch at thattime was its main office or the one closest to its key SEG.

“Now the most important branch is your virtual branch, youronline presence,” he said. “The consumer is now in control.”

Spencer Jones, head of product management – enterprise solutionsat the Toronto-based fintech provider D+H, commented, “In the1990s, we lived in a dial-up, nine-to-five weekday, analog world.Today, we live in a high-speed, always on, digital world. Coreaccount processing was conducted in one monolithic, enterprise, bigiron system. Today, there are diverse, distributed, thin clientsystems.”

Core changes relate overwhelmingly to the member servicechannel, Preston Packer, director of sales and marketing at theSandy, Utah-based technology provider FLEX suggested.

“[In the 1990s], progressive credit unions ran core systems thatprovided member account access through ATMs and telephone banking.Today, progressive core systems provide integrated Internet bankingand mobile banking, allowing real-time transaction processing andlending. The 1990s provided account status. The 2010s allowed foraccount management and creation.”

One of the key changes that took place over the past two decadesrevolved around payments, Mark Sievewright, president of CreditUnion Solutions at Fiserv, said.

“We've seen consumers take control of their finances in a waythat was unimaginable 25 years ago,” Sievewright noted.

Twenty-five years ago, hand-written checks were the primarytools used by consumers to pay bills and transact store purchases.Each check represented an expense to the financial institution forclearing the check.

“Furthermore, check clearings could take more than one week toclear through the consumer's account,” Bilke explained. “Today,check volume is down significantly and continues to dwindle.Consumers use their debit cards instead of checks and settlement isimmediate.”

Jones noted another big difference between 1990 and 2015.

“A 'system of record' core was also your 'system of engagement,'supporting one primary channel-branch,” he said. “Today, there areomni-channel 'systems of engagement' with unique features creatingthe value for the customers/members.”

The growth of data analytics also changed the way credit unionsoperate. They now look at their core processing platform as asystem of record or archive that provides data to help them findnew solutions, Riddle explained.

Benavidez noted having quick access to member data in one spotenables faster member service and increased opportunities forcross-selling.

“Today money is being increasingly represented by information,”Sievewright added. “Big data will change our lives as we moveforward.”

Software-as-a-service models and cloud computing changed thedynamics of deployment and backup as well. Twenty-five ago,on-premises core deployment was more commonplace, Riddle said; nowmany credit unions look at outsourcing their core platforms inorder to better focus on member acquisition, cross-selling andrevenue generation.

From an overall network and infrastructure perspective, offsite,backup systems' use of the cloud has made a significant impact,Matt Wilhelm, managing partner at the Cleveland-based IT servicesfirm Encompass Group, LLC, mentioned.

“Ubiquitous access with newer browser-based platforms, as wellas hosted service bureau and subscription based architectures, hasalso made IT support easier on the credit union,” Wilhelm said.

While self-service channels and digital services has increasedconvenience for consumers, it also created greater opportunitiesfor fraud, Bilke admitted, to which core vendors have respondedwith add-on security solutions.

“Security has evolved significantly with strengthened passwords,biometrics, multi-level authentication, data masking from bothconsumers and employees, better system controls on authorizationlevels, event monitoring and reporting, and PA-DSS certificationunder the PCI standard,” Bilke said.

Sievewright concluded, “How credit unions do core processing isalmost unrecognizable from what it was years ago.”