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Core Processing Quandary: In-House or Service Bureau?

This Opinion piece looks at that big decision all credit unions make with their core technology infrastructure.

By Sabeh Samaha | Updated on February 03, 2014
When a credit union approaches the all-important task of determining whether to reach out to a service bureau or assume all related responsibilities to maintain an in-house data processing system, a number of quandaries immediately arise.

The first issue centers on the asset class, size and geographic location of the credit union. For many small-to-medium organizations, the ability to effectively oversee an information technology operation is not feasible and therefore relying on a third party is essential to success. And for larger credit unions, with a dedicated IT department, it may be prudent to handle all operations in-house, which provides more flexibility when selecting hardware, software and third party solutions, as well as dealing with contract negotiation of services.

The Business Performance Innovation (BPI) Network, in association with Paladin fc, released a report in May 2013 titled, “How Core Vendor Contracts Impact Bank and Credit Union Value.” The report found that 90% of respondents added to their core bank processing and related IT services in the past three years. Seventy-four percent expect to make additions in the next three years.

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