Hybrid Core Processing Frees Up Resources
Hosted service model is a blend of in-house and service bureau systems.
Giving up the control that an in-house core processing system provides can be a big sticking point among information technology (IT) professionals, says Daryl Tanner, president/CEO of Share One, a core processing credit union service organization.
But control brings with it major responsibilities, such as system maintenance and security.
The risk of cyber attacks, for instance, calls for constant vigilance. “That requires expertise—expensive expertise,” Tanner says.
More of Share One’s clients are choosing the company’s hosted service model, which Tanner describes as a hybrid of in-house and service bureau. In the hosted service arrangement, unlike with Share One’s traditional service bureau, the credit union buys the license for the core processing software and uses Share One’s hardware to run it.
“We’re responsible for the security, backups, and disaster recovery,” Tanner says. “The rest is up to the credit union.”
That allows credit unions to run processes and reports whenever and however they want. And if at some point the credit union decides to return to an in-house system, it already owns the software.
“You have that freedom of choice,” Tanner says. “You can go to your board and say, ‘We’re not locked into this.' ”
East Idaho Credit Union in Idaho Falls switched from in-house core processing to Share One’s hosted service model in mid-August. A major draw was being able to free up IT manpower, says Don West, IT manager for the $268 million asset credit union.
With the hosted service solution, his crew still has control over day-to-day operations. The credit union can, for instance, add a new employee user to the system without having to ask the service bureau to take care of it.
At the same time, East Idaho doesn’t have to worry about hardware issues, system updates, security patches, and disaster recovery.
“That’s all taken care of,” West says. “When we come in Monday morning, we just push the new system load out to the machines. When we were in-house, I had to come in at 5 a.m. to do that before everybody showed up for work.”
Still, West admits he had some reservations initially about switching to outsourcing. “I didn’t want my system out somewhere else where I didn’t have access to it.”
He also wondered if he’d become less valuable to the credit union. But he got past his doubts.
“Keep an open mind,” West advises. “You have to weigh the pros and cons. And for us, the pros far outweighed the cons.”
Next up: Part three of this five-part series examines how outsourcing can remove staffing concerns.