Special Report: Part III

Outsourced Core Processing Can Ease Staffing Concerns

Cintel FCU has moved IT staff’s skills ‘up-market.’

December 17, 2012

The departure of a lead information technology (IT) person spurred $70 million asset Cintel Federal Credit Union in Cincinnati to shift to outsourced core processing in 2011, says CEO Bill Zimmer.

He knew hiring a replacement to run the credit union’s complex system would be a challenge given the limited expertise among the local labor pool.

Not only that, Zimmer’s 18 years of experience as the secretary-treasurer of Cincinnati Bell convinced him that an operation such as Cintel Federal needed two backup IT people—not just one as before—to ensure continuity of operations.

2013 Information Systems GuideHiring one replacement and a second backup in the IT department was challenging enough, but Zimmer also faced some hefty capital expenditures. Scanning protocols were changing, he explains, which would have required $40,000 in new software purchases.

This combination of factors convinced Zimmer his credit union could no longer support core processing in-house. Not only has outsourcing solved the IT expertise issue and budget dilemma, Cintel Federal also enjoys access to deeper IT resources, Zimmer says.

“A smaller institution can’t run maintenance cycles at odd hours like a 24/7 data center can,” he says. “So now we have better up-time and better performance on our metrics. Our members get better service. I’m convinced we made the right call” in deciding to outsource.

That’s not to say he didn’t have trepidations at first. Zimmer wondered, for instance, if the local area network delivery was good enough to ensure reliable connectivity to the service bureau. But the credit union’s core processing provider sent an assessment team and gave the green light.

Also, with outsourcing, IT staff might miss being more hands on, Zimmer says. But that’s tempered by certain benefits.

Now Cintel Federal’s lead IT person doesn’t have to run updates at 2 a.m. on a Saturday, for instance. And she has time to talk to members about ways to improve online banking and other services.

“We’ve taken her skills and moved them up-market,” Zimmer says.

He advises any credit union choosing between in-house and outsourced options to examine capital costs, operational vulnerabilities, and level of IT staffing.

Don’t just assume, Zimmer advises, that if you lose your key IT person you’ll have the necessary backup expertise.

"You might think Joe in IT is ready,” he says. “But there may be [an issue] he had a week of training on back in 2008, and you’ve done seven upgrades since then. You need to do a candid assessment of how prepared you actually are for your key person’s departure.”

Stay tuned: The fourth of this five-part series will address how outsourcing core processing can aid in disaster recovery planning and business continuity.