The emergence of self-service channels, such as the web and mobile banking, as well as transformative technologies like big data, electronic payments and remote deposit, have led the evolution of core processing since 1990.
One essential element of the progression, particularly for credit unions, was a shift from closed core systems to open architectures.
Open architecture core banking systems give credit unions the ability to keep pace with rapid technological changes and incorporate best-of-breed functions across the branch, online, mobile and ATM channels.
Today's core processing systems must also have the ability to service all channels 24/7 and seamlessly connect to a wide variety of self-service solutions, as well as to more advanced personal and business banking management systems.
“One of the key aspects of this change is the degree to which core processing architectures have become more open,” Keith Riddle, senior vice president, chief product management officer at the Columbus, Ohio-based, $3.7 billion Corporate One Federal Credit Union.
Theresa Benavidez, president of the San Diego-based core processor Corelation, noted, “An open architecture allows credit unions to implement just about any financial services technology its membership demands, which opens the door to nearly any technology available.”
The movement to open core systems has been significant, suggested Riddle, given the pressure on the credit unions to compete with the larger financial services, very powerful non-financial entities and various verticals.
“Back in the day, the core processor was isolated and third parties didn't talk to it,” William T. Wittig, vice president/CFO for the $205 million, Canton, Ohio-based CSE Federal Credit Union, commented. “Now everything is real-time and it all needs to integrate with the core.”
Credit unions also used to take what the vendor provided. Santo Cannone, chief product officer for the Brookfield, Wis.-based Fiserv's Credit Union Solutions division, explained, “If credit unions wanted to customize a function, techs went into the source code and changed it, and not many folks did that.” Now, software development kits allow for the creation of additional products.
Application programming interfaces now permit credit unions of all sizes to seek best-of-breed solutions, which allows them to differentiate themselves in the marketplace and grow their member bases, Riddle added.
Learn more about core system changes that have taken place in the past 25 years in the Dec. 16, 2015 print issue of Credit Union Times.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
