That's from Symitar president Ted Bilke in his introduction in Callahan's "2017 Supplier Market Share Guide for Credit Union Core Processors." Progressive credit unions interested in growth need a core system that can evolve with them.

Delivery options have evolved as well. Cloud-based core processing has now emerged as an option along with the service bureau and in-house models. CUProdigy, for instance, a Utah-based CUSO, now has 17 credit unions on its cloud-based offering.

"Cloud-based core offers credit unions the control of an in-house system without the expense and headaches of maintaining the hardware," Xerex Bueno, CUProdigy's chief technology officer, said. "And because a cloud-based solution is driven mostly by software, it's typically less expensive than a service bureau solution, which is still hardware-centric."

Symitar and CUProdigy are at each end of the spectrum when it comes to client numbers, but they do share this: An installed base of active users who are part of the feedback loop that helps keep the core processing platforms relevant and responsive, and the market for these major investments hopping.

But the numbers are clear: The larger the credit union, the more likely it is to be a customer of a small group of providers who compete at that end of the market. The inverse: Despite consolidation over the past decade, there still are dozens of providers with customers in the small credit union realm.

A Graphic Look at the Market

Our accompanying graphics on page 10 show some interesting trends in 2015 and 2016. For instance, looking at the table that shows core conversions by asset range, what stands out is an apparent tipping point in the $100 million to $250 million group.

Our take on this at Callahan is that a lot of these conversions are at credit unions who have grown into that asset size and find their legacy systems haven't grown with them. Keeping up is an expensive process for credit union and core processor alike, and the shrinking numbers of smaller providers and their client bases may be showing the strain of that reality.

And check out the look at processors under $100 million in assets. There still are 40 different core processors that those small credit unions are using. Many have less than 20 credit union clients, but not all. FedComp, for instance, still has 654, well down from the 2,500 or so it had around the turn of the century when it rivaled Fiserv in sheer number of credit unions. Of course, there were many thousands more credit unions then, and as their numbers have shrunk, so has the business for many cores.

Now, moving upstream, we see there are 26 providers serving the $100 million to $250 million group. That's the broad band showing more conversions, and we can see that the larger operations stake a larger claim here. For instance, Symitar was No. 7 among smaller credit unions and now is second.

On to the $250 million to $1 billion group. There are 19 providers there, and the consolidation really starts to show in the core process selections of these credit unions, many of whom are investing heavily in people and processes to stay relevant and thriving. That reaches its peak in the $1 billion and up class. Only four providers have a large presence there, all industry mainstays: Fiserv, Symitar, FIS and D+H (UltraData).

But keep an eye on an interloper. Corelation, the 2009 startup that launched an all-new solution called KeyStone, is now going live with a lot of the signings it has announced over the past few years.

Corelation credit unions grew from 23 to 41 (a 78.3% increase) over the past year. It saw a 0.35% growth in market share (number of clients) from 2015 to 2016, but a 0.76% increase in market share (dollar assets of clients). In 2013, it had eight clients live. Corelation, therefore, has multiplied that by five times in the past three years.

The only constant is change. Watch this space.

Liz Furman is Senior Industry Analyst for Callahan & Associates. She can be reached at 202-223-3920 or [email protected].