Imagine a single standard that would enable credit unions to plug in the latest technology without the cost, strain, and delay of integrating solutions with core processing systems.
Envisioning that future has inspired credit unions and vendors alike to contribute thousands of hours to the Credit Union Financial Exchange (CUFX), which is creating an open integration standard for the credit union industry.
A new approach
Spearheaded by the CUNA Technology Council, CUFX is actively supported by more than 40 credit unions and vendors. Participating vendors include leading core processors as well as third-party vendors of middleware and software.
CUFX plans to make a lasting difference in the movement’s ability to innovate and serve members, says Jeff Johnson, senior vice president/chief information officer at $1.7 billion asset Baxter Credit Union, Vernon Hills, Ill., and vice chair of the CUNA Technology Council. He’s also a member of the CUFX Governance Committee.
Johnson serves on the CUFX advocacy group working to gain credit union and vendor support for the project, while other volunteers tackle CUFX’s technical demands through working groups aimed at specific applications. CUFX has received $75,000 in CUNA Technology Council funding and $110,000 in donations from credit unions as of August 2012.
Johnson says the thousands of hours of time and energy credit unions and vendors have committed to CUFX since its launch in 2011 will eventually pay off with improved speed to market as technology innovations occur. “It’s a lot of work upfront—a lot of crunching through very technical details with an enormous payoff down the road.”
The project’s first achievement is a standard for personal financial management applications that’s currently undergoing beta testing at Baxter. A beta test for a new membership process that includes account opening for lending and deposit products is scheduled for the fourth quarter. Security guidelines and standards for online and mobile banking also are in development, with interactive voice response standards to follow soon.
Each standard typically involves multiple working groups that tackle a specific part of the process. The new membership process, for example, involves eight working groups, each addressing a separate segment of the overall task. “CUFX prioritizes the development of new specifications based on credit union demand,” Johnson explains.
The right plug-in
Bob Bodily compares the pre-CUFX challenge of shopping for financial services to looking for a new toaster—only to learn that none of the available models has the power cords or plugs to make it work.
“Once you find the one you like, you have to find the right wiring, put on a plug, and maybe even find a voltage adapter for it,” says Bodily, senior information systems manager at $5.4 billion asset America First Credit Union, Riverdale, Utah. “Doing this for financial system software adds so much complexity to these projects.”
Costly integration demands can sometimes derail technology projects, Bodily says, or significantly delay efforts to deliver functionality to members.
America First compares potential CUFX benefits to a services-oriented middleware project the credit union completed about four years ago. The 18-month project built the middleware needed to simplify the integration of a new teller system into America First’s core system, which it owns and maintains.
“It has paid big dividends,” Bodily says. “Before we could complete the teller system project we had already used the middleware to integrate three other systems.”
Bodily believes providing similar ease of integration to the credit union industry will simplify the decision-making process for financial systems software.
“We will be able to concentrate more on what we need and want in software purchases,” he says, “rather than worry so much about what we can integrate and how much that will cost.”
All CUFX working groups are led by credit union representatives. Dan Larlee, senior vice president/chief technology officer at Harland Financial Solutions, says that approach offers important advantages to the development effort. Harland Financial Solutions provides core processing and third-party solutions to credit unions.
“It keeps the focus away from any particular provider’s technology or issues, and keeps it focused on the industry we’re trying to serve,” Larlee says. He adds that CUFX is poised to take advantage of a “perfect storm” that marks the conjunction of innovation and opportunity.
“We’re on the precipice of a pretty big change in how technology is used for financial institutions and their members with the use of mobile devices such as tablets or smartphones,” Larlee says.
The use of these devices creates new ways for members to interact with credit unions remotely, removing the need to be tied to a keyboard and a mouse, Larlee says. “That shift is basically going to drive the opportunity for a lot of innovation.”
At the same time, Larlee notes there now are fewer barriers to developing integration standards because the sup-porting technologies are well-formed and well-accepted throughout the industry. That enables both credit unions and vendors to redirect the resources currently consumed by integration to further innovation and deployment of new technologies and capabilities.
Participating in CUFX is a “natural fit” for progressive vendors committed to enabling third-party connectivity to core platforms, says Ted Bilke, president of the core processing provider Symitar.
Creating interface standards that both core processors and third-party vendors can adopt will ease integration and “ultimately translate into absolute fastest time to market for credit unions as they introduce new products and services,” he says.
In time, Bilke says virtually any add-on product will take advantage of CUFX. That will make a dramatic difference in the time required to adopt new technology, giving credit unions an edge over competitors.
“Integration has been one of the most time-consuming aspects of deploying a best-of-breed solution,” Bilke says. “CUFX will reduce integration time and effort to the absolute minimum.”
Bilke believes participation in CUFX will eventually determine whether core processors and other technology vendors have the opportunity to provide services to credit unions. Other credit unions and vendors agree, and some predict CUFX will make upgrades and migrations to existing systems easier.
The impact of CUFX is expected to increase as the effort grows, adds Brian Bodell, CEO of Finivation Software, a systems integration and middleware provider.
“Building and getting broad-based standards adoption takes time and will evolve and expand over a period of years,” he says.
The credit union leaders and industry experts supporting CUFX look forward to eliminating the waste associated with current integration efforts, which force credit unions and vendors to develop “one-off” solutions that typically are used only by a single credit union in a specific situation.
But the experience gained from those repetitive efforts is proving valuable as credit unions and vendors develop integration standards that can stand up to members’ demands for technology usability, as well as back-office requirements for technology utility.
Credit unions can support standards development by letting vendors know that adopting CUFX is a requirement to get their business, Johnson says.
If credit unions and vendors remain committed to using standards developed via CUFX, credit unions will eventually experience the standards’ benefits each time they adopt or upgrade any add-on technology product.
“CUFX will help this industry be much more competitive in terms of products and services, speed to market, and innovation,” Johnson says. “This is an attempt to put us ahead of the banks.”
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