By Gary Walston
Credit unions can – and most do – outsource a broad range of business functions. These include call centers, mortgage servicing, core systems, information technology, and ATM management, just to name a few. The challenges lie in knowing how to recognize when outsourcing is the proper strategy and finding the right partner, in order to achieve the desired business objectives.
It’s often a cost efficiency or compliance issue that compels a credit union to ask the key question: Should we be doing this, or should we have someone else do it? When an expense involves large capital dollars and requires a credit union’s board or executive committee approval, this is the time that question is most likely to come up.
The arrival of a new CEO can also make a credit union more open to outsourcing. Fresh, progressive executives are more likely to ask the questions about improving efficiency that can launch an exploration of what outsourcing can do for a credit union.
In the ATM space where my company operates, the cost of compliance is the biggest issue. Major outsourcing triggers in the past few years were the Americans with Disability Act requirements, and then the sunsetting of Windows XP with the accompanying migration to Windows 7. EMV requirements are driving a very strong trend toward outsourcing ATM management today, and we see another push coming in a few years, when migration to Windows 10 will come due.
The Advantages are Clear
The advantages to outsourcing are clear. Turning things over to a third party provider makes for fewer tasks, and less of a management burden, for a credit union’s staff. It allows the staff to focus on what most credit unions will agree is their number one mission: providing the best member service possible.
Credit unions recognize this, but sometimes think they can’t “afford” to outsource. The problem is, they aren’t calculating the real costs of handling a particular function themselves. Different staff members may each be spending hours per week on that function, but because it’s only a small part of their job, it’s not really accounted for.
Breaking down the staffers’ time in detail will often reflect that a credit union is spending at least half or even a full-time employee equivalent. Regaining that time for more productive and member-benefiting activities needs to be part of the should-we-outsource equation.
Some Tips To Consider
If your credit union is thinking about outsourcing, or is looking to do it better, here are a few tips:
- Look for a nimble and flexible partner, one that can create solutions customized to your needs.
- When possible, choose a single turnkey provider, rather than divide a function among several vendors. This avoids finger-pointing among them when there is an issue.
- Make sure the partner is willing to be 100 percent responsible for changes and upgrades related to compliance and regulations, and won’t surprise you with unexpected fees.
- Ask other credit unions – locally, regionally, and nationally – what (and who) is working successfully for them.
Gary Walston is a co-founder of Dolphin Debit, (www.dolphindebit.com), a full-service ATM management company that owns and operates ATMs for credit unions. Contact him at gwalston@dolphindebit.com.