Software for managing the loan portfolio can range from spreading and credit analysis through impairment analysis or sale of the loan. In most cases, the adoption of such software requires a change in process as well as an investment from the credit union. In addition to total cost of ownership, what other considerations should credit unions have for evaluating potential software and its vendor?

Software Functionality

Functionality requirements will vary widely depending on the needs of the credit union. However, these questions can be a starting point for functionality review.

  • Does the vendor provide a live software demonstration or allow the credit union to use the solution hands-on prior to purchasing?
  • Does the vendor have a solution to manage each stage of the life of the loan, including:
    • Tracking interactions with existing and prospective members;
    • Credit decisions, end to end;
    • Loan portfolio management;
    • Portfolio risk management; and
    • Allowance for loan and lease losses?
  • Does the solution interact with external data sources to add more value to users, including Credit bureaus, FRED economic data, peer group data or private company benchmarking for member business loans?
  • Does the solution provide a single point of data entry that flows throughout the solution to save the credit union time? Can it import data to remove data entry completely?
  • Is the solution installed (server-based), web-based or accessible via VPN? How will that impact the hardware the credit union has to maintain?
  • Will all credit union employees have access to the solution as needed? Will that access be tracked and/or managed as needed through the use of separate logins?
  • Are there limitations to the number of reports that can be generated or number of users who can login?
  • Is the solution:
    • Easy to use?
    • Flexible in its analysis and reporting to meet the institution’s current procedural needs?
    • Customizable in terms of institutional defaults and settings?


Integration, Implementation and Support

For most credit unions, personnel and resources dedicated to information technology are limited, making the support offered by a third-party vendor nearly as important as the software itself. The following questions will highlight the service component of potential software, particularly how the third party accommodates integration with the institution’s core processing system.


  • Does the vendor rely on static data reports as provided to the government or customized data reports to account for the credit union’s segmentations?
  • Is the vendor able to import tickler information from the program the credit union previously used or from the core?
  • Does the vendor integrate with the institution’s core processing system and have a history of successful integrations?
  • Can the vendor integrate data from multiple core systems, hosted cores or other data sources, as needed?
  • Can the vendor backfill historical loan-level information, including charge-off/recovery data?
  • Can loan-level data be archived monthly for historical trends and reporting purposes?
  • Can the vendor integrate user-defined or custom fields set up by the credit union?
  • Can the software integrate a relationship or group identifier to build member relationships in the software?
  • What is the average duration of a core system integration for this vendor?


  • Does the vendor provide a dedicated representative to manage the integration and implementation of the credit union’s account?
  • Does the vendor offer an appropriate level of training (e.g., individual web-based training, onsite training, consultant-led case studies, new user trainings) as required by the institution?
  • Will product training be led by individuals who are product experts but also know the industry and regulations?
  • Does the vendor offer user groups for the credit union to learn from other institutions using the software?



  • Does the vendor bill for support (i.e., email enquiries or phone support)?
  • Does the vendor offer multiple points of contact for the credit union to reach product experts located in the U.S.?
  • Does the vendor offer after hours support?
  • What is the average response time for support inquiries?
  • Does the software come with support materials, including user guides, case studies, instructional videos, webinars, etc.?


Information Security

Even with the promise of efficiency and automation, software for a credit union can only add value if its information security protocols keep the institution’s data safe. The following list of questions, along with a more in-depth review from the institution’s IT department, are some fundamental considerations for evaluating software:

  • Does the vendor provide:
    • Site encryption;
    • Data redundancy and backup servers; and
    • Disaster recovery and business continuity plans?
  • Has the vendor provided its service level agreement? Does it explain up time, supported browsers and operating systems, and support expectations?
  • Does the vendor maintain SSAE-16 (SOC 1 & 2 compliance)?
  • Does the vendor offer a due diligence guide to help the credit union with compliance requirements?
  • Does the vendor use additional third-party vendors as subcontractors to fulfill its commitments to clients?


As credit unions consider potential vendors, software functionality, implementation and support, and information security are all major areas to review.

Libby Bierman is an analyst at Sageworks. She can be reached at 866-603-7029 or