Credit Union Core Processors

A credit union core processor is the back-end technology system platform implemented to facilitate and process all digital financial activity within the institution. As such, it is the heart of a credit union’s entire operation and a critical component of an organization’s success and strategic outlook.

Essentially, any time a member uses their credit union's digital services in any way they are interacting directly with the core processor. This could include online or mobile banking, content management, credit and debit card processing, loan origination and much more.

The system also plays a vital role in compliance, reporting and records management.

In its literature on information technology, the National Credit Union Administration (NCUA) outlines the three following types of core processing systems:

–A Vendor Supplied In-House System, in which, a "vendor provides and maintains the software program(s) required" to track member and financial activity data. In most cases with such a core processing setup, the credit union will install on-site and maintain the hardware required to run the system, while the vendor manages and controls the software programming side, including providing updates and customization.

–A Vendor Online Service Bureau, in which both "hardware and software systems reside at the vendor’s location, with the exception of the systems a credit union needs to access and transmit data to the vendor." Under this setup, "most, if not all, data processing occurs at the vendor’s site," with the credit union linked to the provider via dialup connections, private lines, the internet, frame relay, or other wide area network (WAN) services.

Within an online service bureau implementation, many core providers offer two costs models:

• Software-as-a-Service Model – With minimal upfront capital costs, the core provider supplies the necessary hardware and the core license is paid on a per member basis. This model works best for credit unions that prefer lower upfront costs but higher monthly processing fees.

• Credit Union Owned License – In this model the credit union opts to purchase the core software license, which is amortized over the life of the agreement. Additionally, the credit union would purchase their hardware upfront, but it will be housed and maintained at the core provider's service bureau. With this model, a credit union’s initial costs will be substantially higher; however, one’s monthly run rate costs will be dramatically lower.

–A CU Developed In-House System, in which a credit union has "developed, and generally maintains, the software onsite," and is "responsible for the hardware and software systems." In these (extremely rare) instances, a credit union will normally also maintain its own data processing department overseen by both specially trained hardware and software personnel.

CUCollaborate maintains a proprietary database (VendorFI) of credit union core processors and collects user reviews to determine the highest-rated by asset class across the industry:

(Note: for these rankings, a core processor must have at least five credit union clients within the asset class to qualify)

Over $1 billion in assets

1) Corelation Inc. - KeyStone (Rating: 5.3/6)
Clients within asset range: 13; average assets: $2.5b

2) Jack Henry™ – Symitar® (Rating: 5.04/6)
Clients within asset range: 166; average assets: $3.1b

3) Fiserv - DNA (Rating: 5/6)
Clients within asset range: 71; average assets: $3.8b

Between $500 million–$1 billion in assets

1) Corelation Inc. - KeyStone (Rating: 5.67/6)
Clients within asset range: 15; average assets: $741.0m

2) Fiserv - XP2 (Rating: 5.38/6)
Clients within asset range: 28; average assets: $683.1m

3) Jack Henry™ – Symitar® (Rating: 4.6/6)
Clients within asset range: 97; average assets: $719.3m

Between $250–500 million in assets

1) CUProdigy (Rating: 5.44/6)
Clients within asset range: 6; average assets: $334.4m

2) Corelation Inc. - KeyStone (Rating: 4.94/6)
Clients within asset range: 20; average assets: $354.0m

3) Jack Henry™ – Symitar® (Rating: 4.85/6)
Clients within asset range: 96; average assets: $367.3m

Between $100–250 million in assets

1) Corelation Inc. - KeyStone (Rating: 6/6)
Clients within asset range: 23; average assets: $188.8m

2) Fiserv - CUnify (Rating: 5.33/6)
Clients within asset range: 39; average assets: $146.1m

3) Jack Henry™ – Symitar® (Rating: 5.19/6)
Clients within asset range: 100; average assets: $171.9m

Between $50–100 million in assets

1) Member Driven Technologies (MDT) (Rating: 5.63/6)
Clients within asset range: 13; average assets: $82.8m

2) Commercial Business Systems - CAMS-ii (Rating: 5.61/6)
Clients within asset range: 11; average assets: $74.2m

3) CU*Answers - CU*Base (Rating: 5.5/6)
Clients within asset range: 47; average assets: $74.8m

Between $20–50 million in assets

1) Commercial Business Systems - CAMS-ii (Rating: 6/6)
Clients within asset range: 14; average assets: $34.1m

2) FLEX (Rating: 5.97/6)
Clients within asset range: 84; average assets: $33.7m

3) FIS - Mercury (Rating: 5.73/6)
Clients within asset range: 27; average assets: $30.9m

Less than $20 million in assets

1) CSPI – Aurora Advantage (Rating: 6/6)
Clients within asset range: 68; average assets: $9.0m

1) Systronics, Inc. (Rating: 6/6)
Clients within asset range: 46; average assets: $8.7m

2) FedComp, Inc. - Platinum (Rating: 5.96/6)
Clients within asset range: 590; average assets: $4.2m

While there is no right or wrong core processing system, it is vital that a credit union’s technology services align with its broader overall goals. In some cases a system lacking certain capabilities can prove a major hindrance to offering members new and improved services, while in others a credit union may simply outgrow its core system and find it no longer supports its field of membership or asset size.

Selecting a core processor is therefore anything but a one-size-fits-all exercise, and several factors must be taken into account. To help with this process, the following can prove extremely helpful:

–Reviewing a credit union’s current system to understand both its positives and negatives as well as if an update is necessary;
–Performing a Business Needs Analysis Assessment to help determine if there are any gaps between a credit union’s overall strategy and goals and its current technological capabilities;
–Developing and distributing a Request for Proposal (RFP) to alternative vendors in order to obtain in-depth demonstrations of their core functionality;
–Carrying out a detailed Total Cost of Ownership Financial Model for each system to understand how they best fit with overall strategy.

At CUCollaborate, we maintain a proprietary database of core processors that tracks which system is used by every credit union across the entire industry.

This regularly-updated data features a complete vendor profile for every credit union, including contact information, and is available for purchase as an easily sortable Excel file.