By Kirk Drake | August 5, 2019

Credit Union Core Hosting Guide

So, you have finally decided that storing your credit union core servers in your old school computer room may not be the best option. If so, then you’re in the right place: our guide for credit union core hosting.

Maybe it’s because you want your crack IT team to spend more time on member-facing technology, or maybe you have a great technology plan that aligns the long-term impacts of artificial intelligence with the need for cloud and data analytics. Or maybe you can’t find old school technical talent to maintain your 1970’s era credit union core!

Credit Union Core Hosting Options

Credit unions essentially have 5 main options for dealing with the physical aspect of their credit union core.

1) Online or Service Bureau

Service bureau credit union core systems—also known as online core systems—have been around for years. The idea is that your core provider (or another company) hosts and provides the technical operations of the core. They update the software, run ACH and share drafts, and provide ongoing care and feeding of the core.

All of the cores offer this option these days, whether small and nimble like Fedcomp or huge like Fiserv or Jack Henry. These are good options, and OGO works with several credit unions that go this route (with mixed success). If you are a technologically savvy credit union that likes to be on the leading edge, then online or service bureau core systems are probably not a great choice. But if you are a middle of the pack credit union, then this can be a solid, cost-effective option.

2) In-House

Much like online credit union cores, this option has been around for years. In this world, you purchase new hardware every 3–7 years, upgrade the software multiple times a year and provide both technical operations as well as 1^st-tier support for all things credit union core.

Larger credit unions found this option very appealing in the ’90s and 2000s, but even these guys are slowing migrating to the online or hosted option. Why? The core is no longer the dynamic lynchpin of everything financial technology. Once you standardize your middleware and your third-party applications, there really isn’t that much change. Especially if you can have an API layer and can program things yourself.

Either way, this option is a bit more expensive. Moreover, it’s time-consuming to dedicate teams or people to the core and its ongoing operations (no pun intended), and it distracts from the more cutting-edge, member-facing technology you may be looking for.

3) Another CU

In the past, it was not uncommon for several credit unions to team up and share resources to manage their cores together. However, this option is less and less common these days. Really, if you aren’t going to bet a lot on growing this line of business, then 3–5 credit unions will have a hard time getting enough scale and skill to make sense long-term.

4) Co-Location

We see a lot of this these days. The credit union moves all of their client and application servers to the Ongoing Operations cloud, and they need to put their in-house core someplace. Rather than continuing to keep it locally, it’s moved to an Ongoing operations data center and maintained remotely.

With job schedulers like SMA Technologies, you can program the core to pretty much run lights-out, minimizing staff needed to maintain it. Plus, having third parties maintain your UPS, generator, air conditioning, etc., is cheap and easy. Co-location core hosting in a secure, redundant, remote facility is a great option.

5) Infrastructure As A Service

For those credit unions on modern architected systems like Fiserv OSI/Open Solutions, this is a great option. Why even own the hardware? Instead, rent blades from your partner.

The infrastructure sits on a large set of common components (storage, compute, memory) that are well maintained and upgraded over time. Need some more processing? Just turn up the volume. Ongoing Operations works with a handful of credit unions today that have found this to be a solid strategy for addressing the noise that can be the credit union core hardware problem.

Any way you look at it, there are tons of ways to solve this problem. More and more we see credit unions abandoning in-house core hosting because of skill shortages or knowledge gaps and moving to other options.

It is our opinion that credit unions should seriously consider these options and get to the cloud so they can spend a lot more time on analytics, artificial intelligence, and member-facing technology—not plumbing!

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