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Wednesday, Jul 17, 2024

Openness Is Big Asset for Credit Union Core Processor System

A San Diego-based firm is a rising star among credit union core processor providers, creating a technology described as the lifeblood of any financial institution which keeps customer data and transactions in order.

Corelation Inc. doesn’t have anything close to the market share of the three largest core processor providers, which together have more than half of the market. But its platform, called Keystone, is designed by John Landis, a veteran core processor developer who has now built his third system from scratch. His previous two systems eventually became part of two of those top three providers.

Credit union executives say they couldn’t function without a core processing system. So what exactly does the software control?

“Basically everything,” Pacific Marine Credit Union CIO Ward Wells said. “It is the central data processing system. It’s where the accounts are, where the loans are. It’s where all the transactions occur.”

Market Share

Landis built Galaxy, his first core processing system, in the 1970s. The product would eventually become part of the Fiserv Inc. ecosystem of more than a dozen processors which collectively control about 33 percent of the market, according to Callahan & Associates, which issues an annual credit union supplier report. Landis co-founded Symitar in the 1980s; the company was acquired by Jack Henry & Associates in 2000 and currently has about 10 percent of the market.

Landis left Jack Henry in 2005, but longtime colleague Theresa Benavidez said retirement didn’t suit him and he was soon tinkering on a new system.

“When John said he was going to do it again, I said, ‘How soon do you need me?’” said Benavidez, now Corelation’s president and CEO. “There was no pitch. I know how good his software is.”

Landis is Corelation’s chairman and sole shareholder.

One of Corelation’s selling points is the openness of its system. While some processors restrict what other vendors’ software will work on its platform, Corelation is designed to work with just about anyone. USE Credit Union CEO Jim Harris, who completed the conversion from Fiserv to Corelation last year, said the added flexibility makes it far easier to have his in-house development team create modules tailored to USE’s needs.

“You got what they provided,” Harris said of the legacy platforms. “If you wanted something different, you had to go back to them. If there was enough of a market in that, they would develop it and charge you handsomely.”

Landis said that as the core processing market consolidated, becoming a closed system was a business decision for some that allowed them to sell added features clients couldn’t access anywhere else. But he primarily designed Corelation’s Keystone to be open because as a smaller company he didn’t have the resources to develop so many add-ons.

“There wasn’t really a eureka moment,” Landis said. “It was absolutely necessary. We couldn’t possibly deliver everything a credit union could want.”

‘Resume Enhancer’

Corelation currently has 30 credit unions live on its platform, with an additional 21 signed to convert. Its largest client so far is Desert Schools Federal Credit Union in Phoenix, with assets of $3.8 billion. Corelation executives said sales leapt once they successfully converted Desert Schools late last year. Keystone is now one of about a dozen processors handling a credit union with more than $1 billion in assets.

Landis readily admits changing core systems can be a scary proposition for credit unions because failure can seriously damage a financial institution’s reputation. Wells, the Pacific Marine CIO, is converting to Corelation in February and said Desert Schools’ long-term commitment helped convince him the move was the right choice.

“We made a leap of faith,” Wells said. “It’s one heck of a gamble.”

Corelation expects to double its 84 employees in the next three years, driven by this added interest. It moved into a 33,000-square-foot office in Liberty Station earlier this year, quadrupling its capacity. Its clients have more than $17 billion in aggregate assets, but it has less than 1 percent of the core processor market. Benavidez doesn’t expect Corelation to become one of the top three processors, but it could capture a large percentage of annual conversions.

“We could out-convert all of the competitors,” Landis said.

Corelation Inc.

CEO: Theresa Benavidez

Revenue: Undisclosed

No. of local employees: 84

Headquarters: San Diego

Year founded: 2007 (as TerzoSys)

Company description: Corelation supplies credit union database management software that’s required for most functions.


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