It’s a fact within our industry: credit unions need a core processing system. Now that I’ve stated the obvious, I have a question for you…what do you think makes a good core solution? Is it fancy features or the latest and greatest technology? Is it working with the biggest provider available?
Sure, these things sound nice, but, in reality, they’re superfluous. When you truly boil it down, these two “must haves” are simply myths about core solutions, and it’s time to officially debunk these misguided ways of thinking. Let’s get started!
Myth: More features & functionality equal a more robust core system.
The power and usefulness of a core processing system is not measured by the amount of bells and whistles it has. Does it hurt to have chatbot or SMS notification capabilities? Absolutely not! But the real purpose of your core is to house your data and process your transactions – nothing more, nothing less.
At the end of the day, having a bunch of features your staff may never use (or even understand) is pointless. The truth is that a credit union’s core needs are always evolving. Many core providers are constantly developing new features that sound fantastic and beneficial, but your operations don’t depend on these things. What they depend on is processing your daily ACH transactions and transferring funds into the proper accounts, among other things.
Myth: Core solutions are expensive and there’s no way around it.
Ok, so this myth is partially true – core solutions are expensive no matter which way you slice it. However, there’s a difference between expensive and what we often refer to as “core poor.” Bigger core systems don’t always mean better, but it could mean a higher cost that could leave your credit union balance sheet in jeopardy. You don’t want to be struggling with the expenses associated with core to the point that you have to cut corners or raise fees somewhere else.
And in the realm of core processing, the old adage “you get what you pay for” isn’t necessarily a good thing. In fact, it can create bigger financial burdens. As providers constantly turn out new functionality, they’re often accompanied by additional costs. Want to add those chatbot and SMS features? Why not…until you see the fees that come with them.
You’re not going to find a core solution that is cheap by any stretch of the imagination, but you can avoid the pitfalls of hidden fees, added costs and a major blow to your bottom line by staying vigilant. Read all contracts, do your research and find a solution that is willing to grow with you without making your institution core poor.
Heed the Myths – Get Back to Basics
A core processing system is a necessity for every credit union – there’s no way around that! But we have to look into our options – and there are many – with a clear mindset. Instead of being lured in by the glitz of “new and modern” features or the promise of satisfaction from a big provider name, take it back to the basics and ask yourself “what do I really need in a core processor?”
You’re likely to find that a solution that processes your work efficiently and does not break the bank are what you really need. Don’t be afraid to have that Goldilocks “a ha!” moment – don’t settle for less with a solution that’s too small and don’t make yourself core poor with a solution that’s too big. Remember these myths and determine what you really need in a core processing system to find the best fit for your institution.
Rodney May is the chief engagement officer for Vizo Financial. In this role, he is responsible for business development, marketing, product implementation, support for our member data processing system and overseeing the call center. Mr. May has been with the Corporate for more than 27 years.