Thanks for the Oct. 15 article, "Firms Circle Credit Unions in Growing Core Space." I agree that among our peer credit unions, core conversion is the main item on the business plan. SAFE Credit Union will begin our search process this year and convert during the two-year period following our vendor selection. We have been on the same core for more than 35 years.
The SUMMIT data processing system has grown with SAFE from about $80 million in assets to over $2 billion in assets. I agree with you that all of the core vendors want to be our core vendor. It is a big ticket item! And, that is an interesting story by itself. But there is far more significance to a core conversion.
In 1977, when we converted to SUMMIT (ATA was the name at that time), SAFE wanted a computer system that allowed it to compete with other financial institutions. Our main competitive advantage was price, followed by workplace convenience (direct deposit being the main advantage).The business has changed since then.
We now compete based on the basis of giving the member a great experience. We need a data processing system that allows us to know our 170,000 members as well as we knew our 10,000 members back in 1977. We need to have a data processing system that allows us to innovate with different ways of pleasing our members and exceeding their expectations.
The means of competition changes the kind of core a credit union will choose. And the kind of core a credit union chooses will determine how successful it is. Competition on price was a logical choice as the means of competition in the early days of credit unions because credit unions have a tax advantage and are nonprofit member-run institutions.
But price competition in the age of the Internet is another matter. The best price is easy to find there. Having a great experience is harder to find and much harder to deliver. Members demonstrate every day that price isn't the main consideration. They drink Starbucks, they go out to eat lunch at Chipotle, they drive a Lexus and they send their children to private schools. In each case, they could pick a less costly alternative. They choose the best experience.
The sharks may be circling in the water but they are not core vendors. Instead, they are the competitive sharks that will devour those who won't or can't invest in creating a great member experience. Competing on price is a short run strategy.
Low price almost always points to low quality. In the case of credit unions, it is very difficult to be both low price and offer a great member experience. The choice of core has a similar tradeoff between price and how well that core will enhance member experiences.
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