Canadian CUs Band Together To Negotiate IT Deal

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An ad hoc coalition of seven Canadian CUs has flexed its muscle, saving more than one-third last month on a seven-year outsourcing agreement with Montreal, Quebec-based CGI Group Inc., according to Dave Cronquist, VP-systems and corporate services at Thompson Interior Savings CU and member of the Okanagan IT Alliance.

"We came out of the negotiations with a better price and a more efficient product than we would have individually, especially for the smaller credit unions," Cronquist said. "Compared to our current pricing on the platform, the new pricing is a significant gain."

The Alliance members announced last month that CGI would manage their banking, electronic payments, loan origination and member relations management (CRM) via the CGI Retail Financial Services Platform delivered in Application Service Provider (ASP) mode. The agreement is valued at (U.S.) $10 million.

The Okanagan IT Alliance was first assembled in 2000 by four of the member CUs "when there was quite a bit of frustration with CGI," Cronquist explained. "Communication between CGI and its credit unions just wasn't happening. CGI's focus was elsewhere."

Representing more than 132,000 members and $1 billion in assets, the alliance put pressure on CGI and made its voice heard.

"CGI took the alliance to heart, and now their credit union business is important to them," Cronquist continued. "They pay more attention to service."

In addition to saving on the IT platform, the alliance was appointed a dedicated CGI account manager. And in the bigger picture, alliance members are fortified in the struggle against banks and large CUs.

"There are different benefits for the larger credit unions and the smaller credit unions in the alliance," Cronquist said. "The smaller credit unions can't negotiate the way we do as a group."

The larger CUs in the alliance enjoy pooled knowledge and finances as they play out IT strategies. "We've got seven bright people in the group working towards better solutions in the end," he said. Membership at the CUs ranges from 4,500 at the smallest CU to 79,000 at Thompson Interior Savings CU.

With so many happy endings, it would seem that CU coalitions would be popping up everywhere. But the whole idea of a credit union coalition seems distinctively "Canadian", according to Rae Miles, president of Middleton, Wis.-based Open Financial Solutions, a nine-credit union U.S. alliance.

"It would be hard for credit unions in the States to go back and try to work in collective IT relationships now," Miles said, referring to the 1981 acquisition of IT-collaborative CUNADATA Corp. by Plano, Texas-based super-provider EDS, which was the doom of U.S. credit union alliances. "The Canadians are the envy of all of us," she added.

Meanwhile, the Okanagan IT Alliance isn't sitting on its success with CGI. Its mission "changes with the flow," Cronquist said.

"Our next project may be different," he continued. "We need to be flexible, with different leaders and champions for each project. We want to align our products and services, for example, with common product codes. Then we can centralize our IT departments with huge efficiencies as a result.

"At some point, we might just be one regional CU," Cronquist concluded. "For now, we've decided just to work together, and no matter what happens, the end result will be positive."

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