It Could Happen to Credit Unions: The Southwest & FAA Tech Debacles

Your credit union likely uses 51-year-old technology every day, and you can’t do a darn thing about it. That’s right. According to a study by the Government Accountability Office, 10 agencies had critical systems in need of replacement. The oldest of these at 51 years: U.S. Treasury Department.

How much would you like to bet that is the Federal Reserve’s ACH system?

We saw – and probably some of you experienced – the massive delays caused when Southwest Airline’s scheduling system went down over the holidays, or a couple weeks later when the FAA’s system for notifying pilots of little things, like runway closures and airspace restrictions, suffered an outage. At the very least, passengers were majorly disgruntled – I don’t want to think about what could have happened.

So, how do you think your credit union members would feel and respond if they lost access to their money or banking services simply because legacy systems have been held together with Scotch tape?

The legacy systems at Treasury will take an industry-wide effort to move that mountain. Consider what you can control. Think about the technology your credit union and its members rely upon every day to ensure members are able to live their best lives. Of the approximately 50 core processors on the market, fewer than five run on technology that’s newer than 30 years old.

The availability of your technology is paramount for today’s member service. Be sure to ask about your credit union core’s technology age, modernization efforts and road map. What is the frequency and length of downtimes? Demand business continuity and disaster recovery plans for any tech company you might use. One expert shared that most credit unions don’t even have access to their tech partners’ disaster recovery plans. That’s a major red flag!

Tech Partner Vs. Software Seller

A lot of companies offer core processing, mobile banking or other assorted technologies, promising to make your credit union run more efficiently or serve members better. Some are simply selling you tech, while others will ask about your objectives and share in helping you meet those goals. Here’s what to look for when you’re seeking a technology partner that’s invested in your credit union’s success:

1. Stays on top of trends and technologies to implement. Be sure the company is one that can help you serve your members now and into the future. This should be table stakes at this point, but that is not necessarily the case. Pick tech companies that are built on modern code, play well with others and won’t clip your credit union’s wings.

2. Possesses a good reputation and references. Talk with a network of credit unions that are similarly situated to yours. Who are they using? What are the pros and cons? Look beyond the big names and see what companies have great tech without the flashy marketing budgets. You might just find a hidden gem.

3. Listens to your objectives to ensure the company is able to help solve them. When you’re looking for a partner, pay attention to how they treat your credit union through the initial process. Are they pushing upsells or actually listening to your needs and working with your credit union to fulfill them?

4. Makes key team members accessible. Have prospective tech companies walk you through their service methods. Getting that response is crucial, but hearing from the people who can actually provide a solution to your issue is just as important.

5. Shares their actual pricing. Some companies will wave big signing bonuses in front of credit union executives, which they can then apply to updates and services as needed. Companies offering these “bonuses” are not doing it out of the goodness of their hearts – it’s figured into your credit union’s pricing from the start.

Credit unions’ day-to-day business involves a tremendous amount of technology, and it’s critical to how you’re able to serve your members – or not. From the consumer’s perspective, they assume these types of things are being taken care of, if they think about them at all. But when your technology is down, members will certainly know and care about that. No credit union leader wants to even think about the backlash.

If you don’t want to find your business under members’ – or lawmakers’ – scrutiny for operating on legacy systems from the last millennium, like Southwest or the FAA, be sure to ask about these items well in advance of your contract renewals. Your credit union and its members deserve advanced, secure technologies that deliver efficiencies, member service and the security you need to avoid being grounded.

Amber Harsin is the CEO of Prodigy, a core processing and cloud services CUSO based in Salt Lake City, Utah.