Competition and compliance with the Truth-In-Savings Act are fueling credit unions' software purchases.

A survey of 800 credit unions by the Credit Union National Association found that half plan to upgrade their software in the next three years. Half of the institutions also expect to switch vendors or processors.

In the past year, 55% of respondents purchased or leased software products. Larger credit unions were more likely than smaller ones to buy, but almost one-third of those with less than $2 million in assets bought software.

That same 55% plan to acquire more software in the next three years. The biggest gains in the future will be in sales to smaller credit unions since 39% plan to buy software through 1997.

Truth-in-Savings is the No. 1 reason credit unions are planning to buy software.

Of those with plans to purchase software in the next three years, 33% said they will buy it for compliance with Regulation Z, which applies to most credit unions for the first time this month.

Another 12% expect to buy programs to manage assets, liabilities, and budgets. Interacting with credit bureaus is the main draw for 11% of the respondents. And 10% want help with other nonmortgage loan origination and processing tasks.

Besides compliance, a driving force behind software sales is competition. Credit unions surveyed said they want to improve member services in order to keep customers.

Just over half of the respondents said they plan to make upgrades or switch vendors to give members faster services and to keep them available 24 hours a day.

Software accounted for $105 million in credit unions' expenses from 1991 to 1993, which is 8.5% of total expenditures, according to the study.

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