Do you feel your credit union core system has provided any realistic innovations recently? According to research director at Cornerstone Advisors Scott Hodgins's article "Demand Realistic Core Innovations in 2013," core providers were providing a less than worthy effort heading into 2013. Now that we are midway through 2014, where does credit union core technology and related innovation stand today?

At first glance it should be noted that in Mr. Hodgins’ article, he discussed only the largest players in the credit union core technology marketplace.   Evaluation of only the largest core providers is an accepted practice among consultants.  While certainly important, these are not the only credit union core providers, and as the article effectively illustrates, these companies are most interested in acquiring technology, not developing it.  

Is it possible that only looking to the largest providers in credit union core technology is the reason why innovation is stuck on empty?

There is innovation occurring in credit union core technology, it just might not be happening where you would expect to see it.  

Integration:  Bolting On vs. Bolting In

Is “bolting on” outside software considered applications innovation?  While it certainly can be classified as integration, innovation is left to those who create the software, not to those who connect it together.  Was the iPhone itself innovative, or did it require a USB connection to a PC before we could classify it as such?  In many cases interfacing software products together is the best means to accomplishing an end. 

However, think of technologies such as Check-21.  Many Check-21 providers exist in the credit union market with excellent software capabilities.  Yet, merely connecting these programs with credit union core systems leaves potential user benefits on the table. 

There are core systems which have Check-21 “built-in" not "built-on."  This provides teller capture solutions which not only capture check images and manage cash letter creation, but also read check amounts and MICR lines, add the check images to member history, allow members to view these same images from within Internet banking... all with a single image scan.  Additional benefits of such integration expands to other capabilities such as:

• recognizing ‘on-us’ checks and automatically omitting them from the cash letter file
• limiting fraud by matching teller capture imaged checks  against remote deposit capture check submissions
• considering overdraft and courtesy pay parameters

This integration and innovation within credit union core systems exists, you may just have to examine the competition a little closer to find it. 

Many other innovations exist within credit union core technology systems, such as:

• remote control credit cards
• embedded document management
• mobile banking
• mobile lending
• remote deposit capture,

All of these are designed within a single core system, utilizing a single user interface.  Too good to be true?  Only if you don’t believe in innovation.

Data Management: Simple is Better

When it comes to data management, simple is better.  Think of the iPhone example above, are you really concerned that your smartphone is actually a complex device?  Or are you only concerned that it allows you to focus exclusively on your task at hand?  Because smartphone designers have done their job so well, the underlying  technology almost disappears.  

Should this not be true when we talk about data management?  We should judge the success of any credit union core system by how well they automate tasks.  Highly successful systems will free us to concentrate on our objectives – they are simple to learn, simple to use and simple  to own.  Complexity robs data warehouses of their potential. 

When a computing infrastructure becomes more and more complex to manage, the technical team (if you’re lucky enough to have one) spends most of its time managing the mess.  Those providers who rely on third-party data and professional services layer complexity through product interfaces and create a doubly corrosive environment: increasing the costs of administration while the credit union is distanced from its data.  

Simplicity has been achieved by credit union core providers building reporting and analytics into their data warehouse, allowing credit union personnel to focus on data, not data management, and thereby driving real alignment between IT and credit union function. 

Mr. Hodgins is right, core providers are uniquely poised to help credit unions solve management and reporting woes – however, real innovation occurs within a core systems data warehouse not outside of it.