Outsourcing has long played a valuable role in many credit unions’ IT strategies. Today, many forces are driving credit unions to consider outsourcing—and the benefits they can gain from a successful provider partnership are greater than ever.
Outsourcing can eliminate both capital expenditures required for in-house installations and the need for on-staff resources to operate and manage hardware and software. Since outsourcing providers are able to leverage economies of scale, credit unions not only benefit from lower costs, but also have access to the latest technology in a more sophisticated infrastructure and processing environment than they might otherwise have the resources to acquire. Additionally, outsourcing shifts much of the burden of compliance to the data processor while also providing credit unions and their members with powerful security, disaster recovery and business continuity resources.
Perhaps most importantly, outsourcing lets credit unions focus on what they do best—serving members—without worrying about the technology required to do so. Flexible and scalable outsourcing resources allow credit unions to provide more services to a growing membership base without over-investing in hardware or risking capacity restraints.
At Symitar, we have identified outsourcing trends over the past few years and have seen outsourcing myths debunked. It wasn’t too long ago that outsourcing (a.k.a. service bureau) was considered a good option for smaller credit unions, while larger credit unions heavily favored in-house systems. However, it has become fairly common for larger credit unions to now choose an outsourced model when they select a new core system. As a point of reference, of the more than 100 credit unions currently running our core systems in an outsourced environment, more than 15 are in the $250 million to $600 million asset range. That’s significant.
Add to that, credit unions making a core change are not the only ones re-evaluating how their system is managed. Many diverse credit unions, of all sizes, that have traditionally favored an in-house solution are moving to an outsourced environment. Several of the 100 or so credit unions referenced above started out as in-house Symitar clients and later opted to migrate to outsourcing. They have been able to protect their investment in training and development because in-house or not, they are running the exact same software.
If you’re wondering whether a move to outsourced data processing is right for your credit union, we have published a detailed white paper, Outsourcing Proves Its Core Benefits to Credit Unions. It provides valuable advice on whether to outsource your data processing as well as offers guidance on selecting the right vendor once you have decided to make the move.
Outsourcing may not be the right solution for every credit union, but it is certainly becoming a more attractive option for many institutions. The important thing, of course, is that you choose the service model that is best suited for your operation, and then partner with a provider that can deliver it.