Should You Switch Core? Find Out With This Checklist
Your credit union's success hinges on a reliable core processor that facilitates seamless operations, ensuring accurate transactions, supporting member services, and maintaining regulatory compliance. However, recognizing when it's time to transition to a new core processor is not always a straightforward decision.
Beyond the challenges of change lie compelling benefits—technological advancement, heightened efficiency, and enriched member services—that make the transition worth considering. To guide you through this pivotal decision, our blog provides a checklist for your credit union to assess its unique needs, goals, and potential advantages, emphasizing meticulous planning and execution to mitigate risks and ensure a successful migration.
Should You Look for a New Core?
Does your current core processor provide scalability to accommodate the growth of your credit union?
Scalability is crucial for credit unions because it directly influences their ability to adapt to changing member needs and accommodate growth. A lack of scalability could mean that as your credit union expands, your current core processor may struggle to handle the increased transaction volumes, member accounts, and additional services.
Without scalability, your credit union may find it challenging to introduce new products, services, or even expand into new markets.
Continue reading: 10 Ideas for Rapid Member Growth Without Expanding Your FOM
From increased data loads to the ability to seize opportunities, the impact of a non-scalable core processor can be profound. Here are some other effects:
- Performance issues
- Delayed transactions
- Decreased member satisfaction
- Operational costs
As you struggle to maintain an outdated system, your credit union could be missing out on growth.
Does your core processor have a good ROI?
The operational costs of your core processor directly impact your credit union's financial health. If operational costs are disproportionately high, it could strain your credit union's budget, affecting profitability and hindering your ability to invest in member services and technology.
This could manifest as increased fees for members, reduced ability to offer competitive interest rates, or limitations on implementing new technologies. The actual impact may include financial strain, reduced competitiveness, and a decline in member satisfaction if the value derived from the core processor does not justify the costs.
Continue reading: Discover the ROI for Credit Union Tech with the Best Returns
Day-to-Day Impact of Your ROI
Excessive operational costs relative to the value provided by your core processor can lead to a range of negative impacts.
- Your credit union might struggle to allocate resources for essential services, hampering innovation and member experience enhancements.
- High operational costs could result in reduced profitability, limiting your ability to invest in growth initiatives or offer competitive financial products.
- Additionally, if the core processor's ROI is not favorable, it may hinder your credit union's overall financial sustainability, making it challenging to stay competitive in the market.
Is your current core processor affecting member satisfaction and retention?
The average member retention rate in the financial industry is 75%. If your current core processor is causing member experience issues—such as complaints about online banking or mobile app functionality—it can lead to frustrated members, reduced loyalty, and, ultimately, attrition.
Continue reading: Member Retention Strategies
Affecting member satisfaction and retention has far-reaching consequences. Not only does it impact your credit union's growth potential, but it also adds operational challenges as you try to recover from member losses. The cost of acquiring new members can be significantly higher than retaining existing ones, making member satisfaction a crucial factor in your credit union's financial success.
Does your current core processor help you easily adapt to changing regulatory requirements?
Adapting to changing regulatory requirements is critical for your credit union's compliance and overall stability. Without a core processor that facilitates seamless adaptation to evolving regulations, your credit union may face compliance gaps.
For instance, changes in data protection laws or financial regulations may require swift adjustments to your operations, and if your core processor lags in these updates, your credit union is exposed to significant risks.
Download your free copy: Compliance eGuide
The impact of an inability to adapt to changing regulatory requirements can be severe.
- Financial penalties
- Legal repercussions
- Increased operational costs
Moreover, members may lose trust in an institution that struggles to comply with regulations, leading to potential member attrition and image harm that can take years to overcome.
Are you falling behind in the industry due to your current core processor's limitations?
Staying competitive in the financial industry is paramount for the success of your credit union. If your current core processor has limitations that prevent you from adopting new technologies, offering innovative services, or keeping pace with industry trends, your credit union risks falling behind.
Continue reading: Top 5 Reasons Prospects Aren’t Joining Your Credit Union [+ How Fix It]
The impact of falling behind in the industry due to core processor limitations is multifaceted. Your credit union might experience:
- Decreased member engagement
- Lower adoption rates of digital services
- Reduced appeal to a younger demographic
Moreover, your credit union's reputation may suffer, and potential members could be hesitant to join an institution perceived as outdated. This, in turn, may lead to slower growth, reduced profitability, and diminished overall competitiveness.
Finding the Right Core for Your Credit Union
If you have gone through this checklist and feel like it might be time to consider a new core processor, don't worry. FLEX has been providing credit unions with the essential core technology they need for more than 40 years. We proudly offer a mobile banking app, seamless integrations with third-party vendors, and the unwavering support you require to serve your valued members and propel the growth of your credit union.
Contact us today to schedule a demo. Otherwise, click the button below to get your free copy of our Integrations eGuide.