GLASTONBURY, Conn. — Delaying IT purchases, especially those that spur growth or drive efficiencies, could lead credit unions to experience a downturn longer than what's delivered by the economy, suggests one person.
Business for financial institutions will remain "challenging" for the remainder of 2009, acknowledged David Mitchell, SVP and chief marketing officer for Open Solutions, Inc. "It will be a slow, uphill recovery in which we do not return to normalcy until late 2010. The question then becomes how ready are credit unions to make 2010 a dramatically strong year for recovery? This will be largely driven by how well they position themselves in 2009 and early 2010. Our most progressive credit unions are not hiding in the closet when it comes to technology opportunities. They are investing in their futures, smartly but consistently, in accordance with what their capital positions allow."
Mitchell acknowledged that "expense uncertainty" related to the corporate bailout have many CUs placing larger IT purchases on hold. But he hopes the passing of the Corporate Stabilization Program will address spending concerns. "We do expect more purchasing decisions to be made in quarters three and four."
Looking forward, when credit unions get moving, Mitchell predicted the focus will be on rationalization and optimization of all aspects of their organization. "That is, how to do things better. Metrics that show how they perform operationally are becoming increasingly important."
Mitchell warned against slashing spending that may help in the short-term, "but can cripple an institution long-term. This is especially true if cuts are in areas that limit your potential to service members effectively or to grow. Moreover, it is unlikely that you could find enough cuts to offset the projected impact of the Corporate Stabilization Program. There are many small changes that a credit union can undertake that over the long term can significantly impact the bottom line without impacting service levels. For example, increasing e-statement adoption from 20% to 50% of checking accounts can offset in one year up to 20% of stabilization expenses."
