Core processing technology represents one of the most important purchasing decisions for credit unions and has core processors fighting an ongoing battle for market share. And as the number of credit unions dwindles, the core wars have grown more intense.

“It impacts every member of, and employee in, your credit union and is an enormous driver of both your member experience and operating efficiency,” Brad Smith, managing director, technology solutions for the Scottsdale, Ariz.-based Cornerstone Advisors, said of core processing.

Callahan & Associates' 2016 Supplier Market Share Guide lists almost 6,300 credit union core processing clients, some 800 less than the number listed three years earlier. Fiserv and its multiple platforms hold a 32.5% market share.

The Brookfield, Wis.-based Fiserv offers the industry's broadest, deepest and most innovative range of products and services, Santo Cannone, chief product officer for Fiserv's Credit Union Solutions division, said.

“We support 13 core account processing platforms that integrate with our innovative portfolio of solutions in digital channels, payments, mobile banking and bill pay, among others,” Cannone said.

Ted Bilke, president of Symitar, a division of the Monett, Mo.-based Jack Henry & Associates, said his company views the market in two tiers: Large credit unions (greater than $50 million in assets), which equal roughly 2,291 credit unions, and credit unions with less than $50 million in assets, which total about 3,925.

Symitar's Episys encompasses the largest share of credit unions with assets exceeding $50 million that are live on a single platform, at 642 (as of Dec. 31, 2015), according to Bilke.

“The system has tremendous range; it serves more than 40% of U.S. billion-dollar asset credit unions while continuing to attract credit unions below the $250 million asset range,” Bilke added. Symitar's CruiseNet has another 161 credit unions live.

With so many solutions available, it is critical for core processors to differentiate themselves in the marketplace.

“Client support and client satisfaction have long been a key differentiator for Symitar,” Bilke said.

Preston Packer, director of sales and marketing at the Sandy, Utah-based technology provider FLEX, emphasized market share is one tool for measuring a potential partner, but other criteria should include a high-quality product and service, and client satisfaction.

“I do not believe there is a best credit union system, but there is a system that is best for each credit union,” he said.

FLEX offers a single system for its more than 250 credit union clients.

“FLEX does not rely on third-party products to provide core solutions,” Packer noted. “Every FLEX customer enjoys the same benefits of integration and product offerings as the others, no matter the institution size.”

To be a leader in the industry, you have to be true to your word, Theresa Benavidez, president of the San Diego-based core processor Corelation, stated.

“By that we mean that your software has to be stable, your promises to deliver product must be met, your software has to be fresh and you have to foster a culture that thrives on being collaborative,” she said.

For Corelation, a credit union's choice of core processor comes down to member experience, whether it chooses an outsourced, in-house or hybrid platform.

“At the end of the day it's their brand that should come without any limitations from their provider,” Benavidez said.

Tripp Johnson, director, integrated core and cloud solutions at the Toronto-based D+H, noted, “We believe in exploring each financial institution's unique needs to determine the right end-to-end solution for them. We can then partner with them to overcome their challenges and collaborate with them by offering integrated, flexible, seamless solutions that best fit their situation.”

Increasingly, financial institutions are choosing to take their technology solutions to a cloud-based environment, Johnson explained.

“Not only does this allow for a more personalized member service experience by taking the credit union to them wherever they are, anytime and on any device, other advantages also exist, such as increased security, disaster recovery sustainability, scalability and most importantly reduced IT costs,” Johnson said.

Alex Lopatine, CEO of new core processor NYMBUS, described his platform as one that is ready to help credit unions efficiently serve a growing number of tech savvy members.

“The NYMBUS API stacked platform fuses a suite of applications into a singular solution designed for access via one single sign-on,” Lopatine said. “The NYMBUS core is connected on all channels making it truly device agnostic for both members and staff.”

Jeremiah Fleming, CEO for the San Jose, Calif.-based contact center solution provider AltiGen, pointed out other IT-related services are required to run a credit union, such as Voice over IP, secure cloud email, web integration and end-to-end management of the IT infrastructure.

“Core processors should consider how they can best deliver these types of related services,” he said.

In addition, the importance of mobile continues to grow – not just as a channel, but as a fundamental of member service.

“If your core partner is a software developer and can integrate core features within your mobile app, you can meet your members on their terms,” Packer said.

This strategy also works for credit unions looking to reinvent the in-branch experience, Benavidez noted.

“A concierge approach, born out of the retail space, is very popular today,” she said. “Since many core systems today cannot run on tablets, credit unions have turned to the mobile app to kick off the in-branch experience.”

She added Corelation's core system's fully functioning API works very closely with mobile vendors and functions effectively on tablets.

“We are seeing a number of ideas being tried as credit unions reconsider the role of the branch in their delivery network,” Cannone said, adding that some credit unions are using the same system for employee- and member-facing account and loan originations.

“We are also seeing a push for responsive and adaptive interface designs that optimize the user experience across PCs, tablets and other mobile devices.”

“The key is to develop a user interface designed to be optimized for whatever device the application is being presented on so the member has a similar experience at all touch points,” Bilke noted. “You don't necessarily have to recreate the entire core system down to a handheld or tablet screen; this detracts from the overall usability.”

Lopatine added, “Many financial institutions would love to run their front-facing systems on a mobile platform. However, this is extremely difficult when using a legacy core system that was built on a platform and architecture 30 years old.”

When it comes to selecting a core processor, some credit unions feel rushed to make a decision. Tripp Johnson, who specializes in integrated core and cloud solutions for D+H, explained because of recent technological advancements, financial institution executive teams often find themselves in panic mode, suddenly forced to make decisions about solutions without adequate, timely information.

“With the digital experience moving to a mobile-first design, more and more credit unions are looking to emulate a consistent omnichannel experience involving high-touch, not just high-tech, elements,” Johnson said. “Credit unions should be able to go way beyond product to view their technology solution provider as a strategic partner who focuses on the right fit of solutions. Most importantly it comes down to trust – and then guiding the client experience from purchase, implementation and transition into the live environment.”

“Often, the credit union's size and complexity dictates functionality requirements as well as price point, so these two factors are probably the most important,” Matt Wilhelm, managing partner at the Cleveland-based IT services firm Encompass Group, LLC, said.

He recommended involving an application architecture expert in the selection process so the credit union can understand the extent to which the database, front-end elements, and integration points are modern and not built on legacy platforms.

Packer said he believes credit unions should choose a core processing partner based on their individual needs.

“Consultants can provide value when they assist the review process, but quickly lose value when left solely to manage and direct a system review,” he said.

To conduct a proper review, credit unions should spend time with potential vendors, view their products, call existing users and visit credit unions that are already running the system, Packer added.

“Fiserv doesn't take a one-size-fits-all approach to core processing systems,” Cannone stated. “Instead, we match the solution to the credit union's market and technology requirements.”

Bilke mentioned credit unions should consider the vendor's financial stability, client base and integration options.

“With the world going digital in a hurry and disruptive technologies quickly capturing market share, a credit union needs to pick a core processor that understands this and can deliver,” Lopatine said.

Smith said the most important factor is for credit unions to drive the process.

“You want this to be a rigorous and structured evaluation, driven by the documented and prioritized needs of your credit union, so that you're not the subject of a highly polished, practiced, vendor-driven sales process that focuses on the sizzle and hides the steak,” he said.

Smith concluded credit unions must build an institution-wide consensus for the decision.

“That requires a decision driven by a cross-functional team – not your CEO or CIO,” he said.

Instant Insights /

Core Vendors Battle It out in a Shrinking Marketplace

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