<p>As we proceed through 2002, many of the hot topics in credit union technology have slowed down dramatically, with one notable exception: Customer Relationship Management (CRM). This technology issue is expected to remain strong. Meridian Research predicts that the U.S. financial industry will spend over $2 billion this year on CRM applications. And, why not? Credit union executives and boards are continuing to look for ways to navigate a progressively more complex financial services market. The industry is undergoing profound changes that include regulatory issues, non-traditional competitive entrants, increased pressures on traditional product margins, dramatic channel proliferation forcing a focus on efficiency for all channels, and the need to add more products under the credit union brand to serve members better and more efficiently. Credit unions' best competitive attributes are centered around service, trust and community affinity. Credit union brands are often built upon these attributes, and it is my opinion that a focus on these attributes will continue to lead credit unions successfully through the change that is occurring within the industry. Given these dynamics, it's no wonder why technology tools that promise to provide a single integrated view of your member relationships while allowing you to interact immediately with your members would be greatly appealing. Unfortunately, most tools will provide incomplete, outdated information, and will not allow you to use this information to interact with your members when it's most important. For most credit unions, the key to evaluating CRM capabilities and vendors will be to look carefully at the institution's core transaction system. It is often the most significant inhibitor to timely, relevant and filtered information about members because of its older architecture. Legacy-based core transaction systems have moved from a nagging issue to a severe competitive disadvantage for traditional financial institutions. As the industry undergoes dramatic changes and the competitive landscape increases, institutions need more flexible, open-based, real-time, and more efficient core systems. Most credit union executives realize that current legacy-based systems are inflexible, highly proprietary, and costly to maintain. Legacy-based system providers will promote add-on systems, like Teller platforms, CRM, and even middle-ware packages to mask the weaknesses of these old and outdated systems to deliver CRM capabilities. As a result, credit unions have become exposed to the lack of breakthrough technology in the financial services arena. As brokerage, insurance, credit card companies and other non-traditional new entrants increase competitive pressures, credit unions need to be prepared and enabled to offer new products easily and efficiently, know more about their members immediately, and offer pricing and services consistently through any touch point. There is a revolution occurring in credit union boardrooms away from legacy-based systems that no longer deliver but actually inhibit the ability to serve members better. From the legacy core vendor's perspective, a perfect way to sell more product while lengthening the life of the legacy core product entails wrapping around layers of products and services to achieve their own business strategies in an attempt to address the business demands for CRM capabilities. Unfortunately, this approach is usually costly for the credit union to purchase, expensive to maintain, and ultimately they are still unable to deliver the desired results. The institution often has hire additional staff or become system analysts just to maintain upgrades and changes to the various layered components costing the credit union even more. A CRM system is only as good as its weakest link. No matter how good a separate wrap-around CRM application is, if the core does not capture relational information, is not real-time or open, it will severely limit its usefulness. A platform that begins with a legacy-based core application, the same one that proved difficult to integrate with third parties, unable to add products and services easily, and was inflexible, will ultimately fail. Perhaps the most significant problem with this wrap-around approach is that it does not address the most critical and valuable component of a CRM strategy: a single integrated knowledge center that delivers real-time updated profiles on relationships with members, regardless of the touch point or product being used. In addition, it allows the institution to immediately interact with its member at any given touch point. The foundation of a good CRM tool is this knowledge center – where all member interactions, relationships, and other information is immediately available. Such gathered information, which is relevant and can be used based upon rules or predictive tools to interact immediately with the member, will to have a greater impact on the overall service experience. Look beyond the slick marketing brochures and comfort of buying from the oldest core vendors – they probably have the same solution dressed up in CRM buzz words, but it won't serve the member or the institution well. When considering CRM initiatives, credit unions should first focus on the attributes that have made them successful – service, trust and community affinity. When looking at CRM applications, they should look for tools that enable them to exploit these attributes. Providing real-time, integrated information across every channel and leveraging a core transaction system that is based upon member relationships will better allow the credit union to interact with its members at any touch point immediately and more effectively.</p>