The Need For Collaboration - A Business Case for Core Processing
By Daniel Burk, Sr. VP of Business Development
Key to the operation of a credit union is the capability of a good data processor. These systems have continued to evolve from simple accounting systems to complex multifunctional financial systems. Credit unions continually evaluate the value of their system. And if their system reaches the end of its useful life, the credit union is forced to make painful and expensive decisions.
Supporting our credit union partners, CUSN has taken on a role to help lead the search for new core systems and at a better price.
CUSN continues to look for ways to â€œgive backâ€? to our family of credit unions. In early 2013, several of our participants indicated they were investigating a new core system. The feedback was clear, the process was lengthy, time consuming, and required investment to conduct a proper search. Utilizing CUSNâ€™s resources created an opportunity for credit unions to work together and ease the burden of a core processor search.
CUSN wanted to determine whether there was a business case for several credit unions to work together, ultimately selecting one or more core processors. Our objective was to create a value proposition where participants acquired greater benefits at a lower cost.
As a facilitator of this project, CUSN wanted to explore whether to enter this market and if feasible, find an existing vendor that provided a good fit for our strategy. Such a partnership might also create opportunities for additional collaborative services such as accounting and marketing. Our scope was to focus on credit unions between $50M - $250M total assets.
CUSN conducted primary and secondary research to narrow the field of core processors to a short list. Working with a committee of credit unions, we developed a list of criteria that included core processor architecture, functionality, company vision, and collaboration capabilities.
During the summer of 2013, CUSN contracted with Cornerstone Advisors to create a targeted study, which was presented to credit unions in August, 2013. We also contracted with DaLand Solutions to survey CUSNâ€™s 120 credit union clients about core processing. Ultimately, the consultants helped us to define a short list of viable core processing vendors. Working with a sub-committee of 10 credit unions, we identified the decision making criteria:
During the fall, four core processing vendors presented their products to our committee and at the end of 2013, we sent RFPâ€™s to those vendors: Fiserv Portico, CUDP, Share One and CMC Flex. All four vendors provide a strong core system, strong functionality, extended integration capabilities, and in multiple delivery solutions. Each vendor has its strength and weaknesses.
RFPâ€™s have received and we continue to narrow our scope to identify a single vendor. CUSNâ€™s desire is to select a vendor and create a marketing relationship by the end of the 2014 Q1.
Click here to download the full IT Core Services report
For more information, contact Daniel Burk at CUSN, email@example.com]]>
- Robust functionality to support a broad set of credit union needs
- Ability to integrate to several different 3rd party vendors
- Strong strategic vision and the ability to collaborate well
- High level of service quality and passion for solving problems
- A business continuity plan that also includes a strong security plan
- Company strength and financial stability
- And always important, but not necessarily the number one criteria - cost
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By Doug Burke, President/CEO
CUSNâ€™s Collaboration Services
Itâ€™s not just shared branching
Over the last couple years, the word collaboration has been used frequently in the various credit union trades and the credit union community. Everyone agrees collaboration is a cornerstone for credit unions and the idea of taking collaboration to a new level is desirable and intriguing, but also difficult for a variety of reasons. We believe the opportunities far out way the challenges.
To learn more about CU Service Networkâ€™s collaborative philosophy click here.
CU Service Network is pleased to share with you the recent events surrounding our collaborative efforts.
The Need for Collaboration â€“ a Business Case for:
CU Service Network is working with Credit Union of the Rockies in a pilot program to provide accounting support services to the credit union in the area of daily reconciliations. CU Service Network is supporting the credit union staff through a variety of services such as:
- Share draft and ACH exception processing
- Shared Branch balancing
- Teller and official check balancing
- Corporate account reconciliations
The services are designed to offer a credit union a la carte services on an account by account basis to full support services including month end close and financial statement preparation.
Key to the operation of a credit union is the capability of a good data processor. These systems have continued to evolve from simple accounting systems to complex multifunctional financial systems. Credit unions continually evaluate the value of their system. And if their system reaches the end of its useful life, the credit union is forced to make painful and expensive decisions. Supporting our credit union partners, CUSN has taken on a role to help lead the search for new core systems and at a better price.
By Doug Burke, President/CEO
The objective of this project is to determine whether there is a business case for several credit unions to work together with CUSN to create a comprehensive accounting operation. By doing so, can we create a value proposition where participants acquire greater benefits?
As a facilitator, CUSN would explore whether to enter this market, offering fully outsourced accounting or ala carte services. If it is feasible, CUSN would hire staff to provide the accounting services.
The development of an accounting solution for credit unions is based on the premise of economies of scale. Today credit union accounting operations tend to have some of the following characteristics:
By creating an accounting solution, most of the issues identified above could be successfully addressed.
Target Market Research
The market has been identified as credit unions with total assets between $20-$250 million located in CUSNâ€™s existing 7 states, with the addition of 3 contiguous states.
The initial market would be the Denver metro area for ease of implementations.
Management met with select board member credit unions and additionally 10 member credit unions to discuss project. The credit unions were asked a final question:
Do you believe outsourced accounting in a collaborative CUSO environment is viable? (Scale 1-10, 10 being high)
The scores ranged from 3 to 10 with the average score being a 7.
- Lack of depth (vacations, sick leave or unexpected departures, impact operations)
- Insufficient internal controls and separation of duties are due to a limited staff size
- Access to software systems and tools limited by scale and cost
- â€œCFO or Controllerâ€? positions maybe limited due to access to skilled talent or pay considerations
Our research has not been able to identify potential competitors other than organizations offering basic bookkeeping services.
- Larger credit unions interested in repetitive daily services
- More desire for ala carte services then packaged services
- Several credit unions would not be interested in the service today because they have strong long time staff, but would very much consider the service if they left.
Services â€“ Potential Areas of Focus
- Access to better services for the same price
- Access to more qualified employees
- Access to more sophisticated technologies or systems
- Back up or more depth
- Improve internal controls and separation of duties
- Settlement Services â€“ ACH, Drafts, card services, shared branching
- Daily entries
- Accounts Payable
- Fixed Assets â€“ Booking assets, depreciation schedules
- Investment Accounting
- Sub-ledger to G/L Reconciliations
- Monthly Financial Close
- Financial Reporting
- Call Report
- Cash Management
- Budgeting & Forecasting
- Asset/Liability Management
- Management Reporting and Analysis
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