A credit union core processor refers to all the back-end IT systems that help to not only allow a credit union to function but also continuously process all the financial activity within that environment as well. To put it another way, it is the heart of the entire credit union and is an asset of fundamental importance.
But at the same time, it's also essential to acknowledge that there is no magical "one size fits all" approach to selecting a core processor. A solution that works objectively well for one credit union may be woefully inadequate for the next because each has different communities that they serve--and ultimately different goals to accomplish. Therefore, when making a decision in terms of the right providers who offer core processing for credit unions, there are a number of key things to keep in mind.
Industrial Federal Credit Union Conversion Story
Core Processing For Credit Unions: Breaking Things Down
All told, there are a few different models to choose from when it comes to selecting a core processor. The first is the software-as-a-service model, otherwise known as SaaS. Here, you have minimal upfront costs, and licensing fees are paid on a monthly basis. Depending on the functionality needed, however, those monthly costs might increase. Still, this model affords a great deal of flexibility--perfect for credit unions that are in the process of scaling.
The other option is the credit union-owned license. Here, you purchase one core software license that is then amortized over the life of the agreement. Your credit union has to purchase all necessary hardware upfront, but you do get the added benefit of complete control over your environment.
So which option is best for your credit union? Again, there is no one "right way" or "wrong way" to handle this type of decision. Some credit unions are simply not in a financial position to afford major upfront costs, which is why the software-as-a-service model will more than suffice. For others, they want to keep everything in-house to maintain control - meaning that the credit union-owned license model is clearly the right choice.
Don't start with one particular arrangement and hope that it makes sense for your circumstances. Instead, begin by making a list of your unique needs and then work your way back to a core processor solution that can meet as many of them as possible. That's not just how you get a digital transformation off the ground, but it's how you guarantee long-term success as well.
Need Help Figuring Out Which Core Processing Route to Take?
Industrial Federal Credit Union experienced a lot of the issues outlined above and was able to come out all the better for it on the other side. We have found that reading a true story like this can be highly beneficial in helping others make these important decisions for their credit union. If you'd like to find out more about that unique process, please click the button below to get started.
