How to Get More Core Competition

Consolidation among core processors isn’t ideal, but neither are the alternatives.

November 01, 2013
/ PRINT / ShareShare / Text Size +

The cost of an in-house core system is extravagant. When you tally up the bill for hardware, software, and the people to run everything, it’s enough to make Warren Buffet cry.

As credit unions grow, technology costs grow even faster. Blame this on the inordinate complexity of combining disparate systems—an unfortunate fact of life. A core systems salesperson once told me, “Size brings complexity, complexity brings cost, and cost brings salespeople on commission.” (This salesperson eventually was dismissed, probably for being too honest.)

Consolidation among core providers exacerbates the problem. Only four providers—Fiserv, Symitar, FIS, and Harland—control more than 90% of the market among credit unions with more than $250 million in assets. This lack of competition isn’t a good thing for credit unions, especially those that rely on innovation to remain competitive.

We need more competition, but how do we get it?

I have an idea. What would happen if the top companies in the U.S. could be lured into building core systems for us? It might look something like this:

Microsoft : After building something that worked and was affordable (XP), it forcibly upgrades everyone to its new Vista system, which runs twice as slow and includes an annoying nag feature. After many complaints, it develops a better system but it requires new hardware. And so the cycle continues.

Verizon: Contracts now run 10,000 pages and are incomprehensible. The system generally works, unless it doesn’t. If it doesn’t work, Verizon tells you to find “a better place” and try it again. New models roll out continually, each much better than the last. But you can’t upgrade until two years from when you signed the contract.

Costco: Low-cost and easy to use, it’s a wonderful system but with a tendency to occasionally multiply things by 20, 30, or more. Features beloved one minute mysteriously disappear the next, showing up months later in a completely different part of the system.

United Airlines: In every release, more and more is packed into a space that seems smaller and smaller. Most projects arrive late and with little explanation. Unexpected fees are prolific and mysterious, ranging from “fuel” fees for telephone support to “baggage” fees for complaining about the lack of human support.

Walmart: While the soft ware is cheap, you question the prudence of its strategy of outsourcing soft ware development to 8-year-old children in a third-world country. You’d complain but the phone is being answered by a very old greeter who creeps you out.

Facebook: Innovation is everywhere, but the regulators are up in arms when each transaction is inexplicably shared with everyone else. Worse, security is a third-party option.

Boeing: The product arrives in a huge box. Upon opening it, you’re amazed at the level of detailed craft smanship and engineering. Once plugged in, it runs flawlessly before catching fire because a $1.99 AA battery fails.

IKEA: Your system comes in several boxes with installation instructions. Aft er you put it all together, you have extra parts you realize aren’t extra. While the system is functional and affordable, aft er a bit of time you find it’s a bit more wobbly and unstable than the demo you saw at the store.

Disney: The system works amazingly well—almost magically. Of course, at that price, it should. Everything you do seems to cost four times as much as you’d imagine. The nomenclature is a bit odd, as you find yourself with Lending Mountain, Accounting Castle, and Teller Land. At least everyone’s happy.

OK, so maybe the current core providers might be just fine. After all, things are specialized….






JAMES COLLINS is president/CEO at O Bee CU, Tumwater, Wash.

Post a comment to this story


What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive