As your credit union grows and evolves, you may need to re-evaluate your relationship with your core processor. To assist in this crucial decision-making process, Callahan & Associates releases an annual guide that provides valuable data about the core processor industry.
While this guide offers a wealth of information, credit unions often find themselves overwhelmed with data, struggling to discern its relevance and application. In this blog post, we will explore the Callahan Guide's insights, focusing on market share data, and provide practical ways for credit unions to use this information to make informed decisions.
How to Understand the Market Share Data
The Callahan Guide's comprehensive analysis of market share is a cornerstone for credit unions seeking the ideal core processor. By utilizing graphics and charts, the guide presents a visual representation of the competitive landscape. However, it's essential to understand how this information translates into actionable steps for credit unions.
Large vs. Small Market Share: Weighing the Pros and Cons
One of the key considerations when evaluating market share is the size of the core processor's presence in the industry. Large market share implies widespread adoption and a significant user base. On the other hand, small market share suggests a more niche presence. Let's dive into the pros and cons of each:
Large Market Share
Pros
- Established Reputation: Core processors with a large market share often have a well-established reputation, indicating reliability and trustworthiness.
- Extensive Resources: These companies usually have more extensive resources, which can translate into better support, frequent updates, and innovative features.
- Industry Standard: A widely adopted core processor is more likely to align with industry standards and regulations.
Cons
- Lack of Personalization: Larger providers may offer standardized solutions, potentially limiting customization to specific credit union needs.
- Increased Competition: Credit unions relying on widely used core processors may face increased competition for resources and attention from the provider.
Small Market Share
Pros
- Personalized Service: Smaller core processors may provide more personalized attention and tailor solutions to the unique needs of credit unions.
- Flexibility: These providers may be more adaptable to changes and open to incorporating specific features requested by their clients.
Cons
- Limited Resources: Smaller market share may indicate limited resources, potentially leading to challenges in terms of support, updates, and scalability.
- Perception of Risk: Credit unions may face concerns about the stability and longevity of a core processor with a smaller market share.
What is Best for Your Credit Union?
Credit union core processors are like puzzle pieces - they need to fit perfectly with your credit union's unique needs. To make this match, take a deep dive into your credit union's...
- Yearly priorities
- Member needs
- Budget
- Challenges
- Technology
How to Understand Change in Market Share
The core processor industry is dynamic, with market shares constantly shifting. A crucial aspect of the Callahan Guide is its examination of these changes and their potential impact on credit unions. Here's how credit unions can navigate through shifts in market share:
Innovation and Updates
- Increase in Market Share: A core processor gaining market share may have more resources to invest in innovation and regular updates. This could result in your credit union benefiting from new features, improved functionality, and better overall performance.
- Decrease in Market Share: On the other hand, if your core processor is losing market share, there may be concerns about their ability to invest in research and development. This could mean fewer updates, potentially leaving your credit union with outdated technology.
Cost Implications
- Increase in Market Share: Higher market share can lead to economies of scale, potentially resulting in cost savings for credit unions. As the core processor serves a larger client base, they may be able to offer more competitive pricing.
- Decrease in Market Share: A core processor with decreasing market share might face financial challenges, potentially impacting their pricing structure. Credit unions should be cautious about potential cost increases or additional fees.
Long-Term Stability
- Increase in Market Share: A core processor gaining market share may be viewed as a stable and reliable choice. The increased user base suggests that other credit unions trust and value their services.
- Decrease in Market Share: Conversely, a declining market share could raise concerns about the long-term stability and viability of your current core processor. It might prompt your credit union to consider alternative solutions to mitigate potential risks.
Vendor Relationships
- Increase in Market Share: An expanding market share might strengthen the vendor relationship. Your credit union could benefit from a more established partnership, potentially gaining access to exclusive features or enhanced support.
- Decrease in Market Share: If your core processor's market share is decreasing, it might impact the vendor-client relationship. Your credit union may need to assess whether the diminished market share affects the quality of service and support received.
Changes in market share among core processors can influence the level of service, innovation, costs, and long-term stability experienced by your credit union. It's crucial to stay vigilant, regularly assess the market landscape, and consider these implications when evaluating your core processor relationship. This proactive approach will help your credit union make informed decisions and adapt to the evolving dynamics of the core processor industry.
Finding the Right Core for Your Credit Union
The Callahan Guide provides valuable insights for your credit union navigating the core processor landscape. By using market share data, your credit union can align decisions with your unique needs to find the right core processor. Click the button to download your free copy of our Core Technology Survival Guide to help you in your journey.
