The technology that powers a credit union is rapidly changing. The industry has seen remarkable transformations over the past several years due to disruptions from the pandemic and changes in members’ attitudes and behaviors. As a result, credit unions are reevaluating their technology platforms to ensure the gradual enhancement and improvement of their current systems to better adapt to the evolving times.
Traditionally, financial institutions have been hesitant to replace their core platforms. A recent survey found that three-quarters of CEOs aren’t planning a change despite the need to further their digital transformation. While these executives have recognized the need for change, this is seen as a timely, expensive, and arduous endeavor. Credit unions looking to make this type of swap typically focus on getting better pricing terms instead of adding a significant expansion of services or product capabilities.
However, credit unions are now embracing the need for change and are investing in fintech to accelerate innovation and expansion. And they’re making the connection through a sidecar core strategy. With this strategy, credit unions turn to middleware firms to add niche products while leaving the underlying core platform in place – often by taking advantage of cloud-based offerings. Essentially, this is positioning a core-like solution next to the legacy core.
A sidecar core strategy can help credit unions quickly adapt to market conditions and changes in members’ attitudes. Rather than waiting an extended period to turn to an alternative core with better APIs, credit unions can gradually migrate data over time. What once took years and was seen as disruptive could occur in as little as one weekend. This approach opens a whole new realm of possibilities for credit unions, allowing them to swiftly introduce new products and improve customer satisfaction while streamlining their operations. Credit unions can operate with a greater competitive edge as they increase value faster in an ever-evolving market.
Legacy core providers often present challenges regarding support and service, particularly during conversions or upgrades. Credit unions looking for a seamless transition without disrupting their members frequently opt for a core-agnostic approach, integrating alternative third-party solutions to bolt onto the core or run parallel systems. While there are many options to consider, it comes down to developing a sound strategy with the right partners to recognize value in months rather than years. Furthermore, by partnering with middleware firms, credit unions can utilize reusable APIs for a solution that is easier to manage. This allows credit unions to pursue a digital strategy that doesn’t have to involve a lengthy core conversion process.
The power and necessity of collaboration is evident. Through these partnerships and adopting the aforementioned strategies and solutions, credit unions will enhance their technological capabilities and accelerate their growth, ultimately revolutionizing how they serve their members.