Back in the day, choosing ancillary technology products was easy. Core systems were “closed,” so you either chose the core processor’s product, or you chose not to offer that service. Easy.
Then about a decade ago, the “best of breed” wave began to sweep across the credit union movement. Warren Marshall, then CEO of Stanford FCU, became the poster child and pied piper of what he affectionately called the BOB movement. As technology correspondent for this very newspaper, I interviewed Warren on this topic. His message was simple: credit unions should insist on “open” systems, and then add on whatever third-party products they see fit for their unique environment.
For credit unions, it was a seemingly great idea. Taking this approach, each credit union could finally create a custom-tailored technology environment. However, it also created quite a conundrum for core processors.
On the one hand, they had to both open their systems and make their ancillary products more robust just to remain competitive. On the other hand, most–but not all–were more than a little apprehensive about jeopardizing their lock on the ancillary products market. After all, any honest core processor will tell you there’s big money in ancillary products. But given the market pressure, core processors had no choice. Those that hadn’t yet opened their systems up began to do so.
Unfortunately, taking the best-of-breed route was not without its speed bumps for credit unions. Some credit unions had the IT muscle to manage such an endeavor without breaking a sweat. Many others didn’t. These pioneers found themselves playing the role of frantic middleman, negotiating integration project after integration project between a somewhat reluctant core processor and a third-party vendor who wanted everything done yesterday. Surely there had to be some better middle ground.
In an editorial in this publication in 2004, when I was working as an independent consultant, I coined the term PIEBOB, or pre-integrated best of breed. I called upon core processors to go beyond mere buzzword compliance–to go beyond just handing their credit union customers a toolset and saying, “Have at it”–and actually HELP their customers integrate these third-party products–even third-party products that compete with their own ancillary products. This is the least a credit union should expect from an organization that claims to be a strategic business partner.
So where does that leave us today?
VERY few core processors have embraced PIEBOB. Virtually all of them offer the tools that make third-party integration easier. Some even offer programs in which third-party vendors can participate–as long as their products don’t compete with the core processor’s ancillary products.
It’s the rare core processor indeed that embraces the idea of third-party integration–that’s willing to work directly with those third-party providers–even competitors–to ensure that your credit union can deploy the technology it needs as efficiently and effectively as possible.
I believe that’s the true wave of the future–core processors that embrace not only the technology of openness, but the philosophy of openness, as well.
John San Filippo is marketing manager with Symitar Systems, San Diego.