A recent study indicated that in the first half of 2022, total income for federally insured credit unions reached an enormous $18 billion. While the sector has certainly experienced its ups and downs as a result of major shifts brought on by the COVID-19 pandemic, it can also be said that credit unions are becoming a top choice for consumers over traditional financial institutions with no signs of slowing down anytime soon.
This is especially evident in the core processing space--many core providers continue to innovate and act as the rock-solid foundation upon which a credit union's functionality and services are built. Indeed, by paying attention to the trending themes in core processing, you won't just see how far things have come--you can also get insight into where they are likely headed moving forward and how your credit union can benefit.
Core Processing: The Story So Far
One running theme throughout the world of credit unions and core processing has to do with consolidation. 2023 will be a year when familiar brand names are dropped, as some core platforms consolidate a number of different solutions into a single platform. This is true, even for organizations that are currently leading the way in terms of market share.
One player in the space, for example, previously had 689 credit unions under three different providers. By bringing those core platforms together, the claim is that they can provide better service to their clients rather than being served in a disparate manner.
Even though the volume of credit unions in the country is on the decline, the number of total members is increasing. This number rose by 4.2% between 2021 and 2022, for example. If that trend continues, CUs will need a top-performing, efficient core processor to support their future successes, and having it all under one platform, will make it that much easier for credit unions to keep up with the demand.
Indeed, there is a revolution happening across the credit union core processing marketplace as we speak. While those "big box" vendors are putting forth a considerable amount of time and effort arguing among themselves about who is "biggest," there are other credit union core data processors who are quietly winning in terms of the ground game. This is because they offer not only innovative technology but superior customer service as well. One would be wise to not let these providers go unnoticed.
The Future Is a Bright One
Despite all of this continued evolution, one fact remains the same: a credit union's core platform plays a critical and essential role as the centralized backbone that enables a CU to deliver the best products and services to its members. The core processing software is typically a credit union's largest investment after employees and physical space, and with good reason--it truly is that important, and it will continue to serve that function in the future.
Industrial Federal Credit Union's (Lafayette, IN) efforts to modernize its services with major core upgrades happened right as the COVID-19 pandemic was beginning to make its way around the world. To learn about the approach the CU and the FLEX core conversion team took, and how they were able to overcome the unforeseen challenges, click the button below to download this case study.