Is your core open? 3 questions to ask

Open core systems – systems into which you can integrate, or at least interface, various third-party software packages – have been a thing for decades. And yet, the definition of an open system is … well … still open to interpretation.

Every core provider out there will claim to offer an open system. To a certain extent, it’s true, too. With enough brute force and a big enough hammer, you really can jam a square peg into a round hole. Of course, the ill-fitting result won’t necessarily produce the experience your employees or your members deserve.

There are a number of larger core processors whose income models are based on selling you core, and then selling you a wide range of ancillary products. These providers are forced to offer open systems. That’s because without an ostensibly open system, they wouldn’t be able to integrate their other products, which are more often than not the result of acquisition rather than true innovation.

Typically, to “encourage” your credit union to buy their product, instead of a third-party product that may be better and just as easily integrated, these core providers will charge an exorbitant “integration fee.” In the core processing business, integration fee is shorthand for “we’re going to make this so cost-prohibitive it won’t make financial sense to buy anyone else’s products.” These companies would rather play financial shenanigans than compete on a level playing field.

Then there are systems that are open only because their manufacturers have created a layer of middleware to serve as a bridge between their potentially dated technology and the rest of the fintech industry. Naturally, to obtain this middleware, you have to license it from the core provider for a fee. Like the core providers in my earlier scenario, these companies won’t let you choose a third-party product without getting at least a piece of the action.

Finally, at the other end of the spectrum are core providers that actually want you to succeed. They understand that each credit union should be able to make its own technology decisions in its own best interests, without being nickeled and dimed into oblivion.

Such a provider offers a truly open API and doesn’t charge you anything to access it. What’s more, if you need help integrating a third-party product, they’ll provide that assistance, also without charge. That’s what I call open.

How should we define an open system into today’s modern technology world? Consider these three questions:

• Can you integrate a third-party product without paying an exorbitant integration fee?
• Can you also do so without licensing expensive middleware?
• Finally, will your core provider actively support all of your technology decisions without trying to profit from them?

If you can answer yes to these three questions, you have a truly open system.