System Provider Walks Latest Solutions, Smaller Budgets Tightrope

WALTHAM, Mass. — The decision by some credit unions to no longer manage their data processing systems in-house and increased penny-pinching has created opportunities for Credit Union On-Line Inc.Formed in 1980, the CUSO provides data processing solutions, Web-integrated technology and other support services for 20 credit unions ranging from $1 million (“the pro bono” client) to $600 million in assets. CUOL recently partnered with Moorpark, Calif.-based XP Systems to support the XP2 solution in a service bureau environment.“Credit unions are focusing their dollars on replacing outdated systems,” said Barbra Lowman, chief operating officer of CUOL. “They are committing more of their dollars [in software] not so much in hardware. When you have to spend money and look at every penny, you want to invest wisely.”CUOL is coming off a two-year conversion from a well-known industry provider that was acquired. Prior to then, it had reached a crossroads and ultimately decided to link up with XP Systems, said Connie Boretti, CEO of CUOL. The “hard work and some heart breaks” between 2005 and 2007 that came out of the conversion paid off because they were able to sign on six new credit union clients, all of whom were worn out with the financial and operational responsibilities that sometimes come with managing data processing systems in-house.“It’s somewhat of a financial burden between regulators and compliance issues; it’s overwhelming for some credit unions,” Lowman said.In 2008, CUOL completed the conversion of two of its credit union’s systems and at press time was gearing up for a third. By June 1, four conversions are set to wrap up. Boretti said the CUSO is in the middle of the next phase of what she prefers to call “migrations” rather than conversions-soliciting new customers that are not on the XP system.CUOL is also preparing to roll out a branch store and forward system in the first quarter, Lowman said. The separate, online backup system that kicks in when the core system shuts down, allows transactions with members to continue during the down time. When the core is booted up again, transactions can then be sent back there, she explained. Boretti likened it to a virtual private network being the suspenders and the branch store and forward system as the belt.For members who don’t need or want brick and mortar branches, the CUSO will roll out mobile banking this year. Boretti reasoned that not everyone is Internet savvy, but it’s safe to say that everyone has a cell phone. As a competitive tool, especially for smaller credit unions, CUOL is also implementing CheckFree’s bill payment solution.There’s a big push underway to help credit unions target and reach Generation X and Y. Lowman emphasized that with the industry’s aging membership, there needs to be a stronger focus on injecting younger members into the movement who clearly do business a different way. To that end, CUOL will offer the Internet Switch Kit, a Fiserv product that allows prospective members to create new accounts online. My Money, an online banking interface made especially for Facebook, allows member manage finances from their profiles. One of the goals is to present nonstop opportunities for credit unions to grow their membership as Facebook users pass on information to their online friends.Boretti said it’s fine that you may have board members in their 60s who may not use Facebook or other online services, but at the very least, “they have to acknowledge the fact of looking at Generation Y and X for the survival of their membership.” Knowledge is power and when presented with hard facts on how young people conduct their financial business, it’s usually not hard to convince older senior executives and board members that they may be missing an opportunity, Lowman said.Along with a growing outreach to the youth market, credit unions can expect to see more regulations this year, Boretti said. The industry continues to see its share of credit card fraud and as a result, security solutions will rank as top priority in 2009, she added.“Everything that we do, we have to be sure to shore up the database so you don’t have a TJ Maxx situation,” Boretti said.There’s been a renewal of out-of-the-box thinking within the industry, Boretti observed, with many asking “what can I offer that is not credit union-related.” The formation of new CUSOs is helping with those efforts.–[email protected]