UK credit unions busy with tech modernisation

There is a lot of activity going on in the UK’s credit union space, as the participants realise they have no choice but to modernise. So who is doing what? Which technology providers are set to gain and who might be a loser?

UK credit unions: modernise or bust?

London Mutual Credit Union and TCS Financial Solutions
London Mutual credit union has recently embarked on a major tech overhaul – it is implementing TCS Financial Solutions’ Bancs core system.

London Mutual offers a range of savings accounts, loans (including payday loans) and current accounts.

It follows in the footsteps of two Scottish entities, Capital Credit Union and Scotwest, who were the first amongst UK credit unions to sign for the Bancs platform (this was back in 2010).

Birmingham-based Citysave Credit Union signed for Bancs in 2012, but the project did not go ahead. Citysave continues to use Kesho Systems’ Curtains.

Abcul and Fiserv Agiliti
Meanwhile, the Association of British Credit Unions (Abcul), is implementing a shared platform for its members. Around 40 entities have already signed up for it.

At its heart, this shared Software-as-a-Service offering has Fiserv’s Signature core banking system. It is delivered as part of the broader Fiserv’s Agiliti solution. Agiliti is a combination of around 18 Fiserv and partner applications, hosted by Blue Chip. Together, they create a front-to-back office proposition for UK banks and credit unions.

The Abcul project is supported by the UK government, as part of the Department of Work and Pensions’ Credit Union Expansion Programme. The overall programme is valued at £38 million, with the technology portion believed to be around £8 million.

Abcul signed for Fiserv’s Agiliti in mid-2014. AT Kearney advised on the selection. It is understood that other bidders for the contract were TCS, Kesho Systems, and Temenos (in partnership with HP).

The first deliverables were in place at Abcul by the end of 2015.

My Community Bank and Mambu
My Community Bank (despite its name, it is a credit union) was launched in late 2013 on the cloud-based back office system supplied by Mambu. My Community Bank is an online entity that grew out of a small London-based entity, Brent Shrine Credit Union. It positions itself as a viable alternative to payday lenders.

Finding the right core banking system was “the key part of the process”, Mohsin Mehdi, CEO of My Community Bank, said at the time of the launch.

The credit union scoured the market and looked at the traditional suppliers in this space, but felt that it needed a system that would have more banking specifications.

When it discovered Mambu, “it was love at first sight”. The team liked the cloud-based set-up Mambu offered (as unlike other vendors that also claimed a cloud offering, it didn’t require My Community Bank to have any servers on its premises).

The cost proposition was favourable too, as well as the fact that Mambu did not require a multi-year agreement. Instead, it offered a deal on a 30-day notice basis.

By comparison, another vendor (a major international supplier) wanted the payment upfront and a 15-year contract (which was then negotiated down to a five-year one).

Also, Mambu offered flexibility and fast response in terms of implementing any changes or new functionality. Other vendors “were very rigid”, Mehdi observed. It was “the attitude and the service” that proved a winner for Mambu, he felt.

6Towns Credit Union and Temenos
6Towns Credit Union signed for Temenos’ T24 core system a couple of years ago.

The project was going to be delivered by a small Ireland-based IT firm, but it went bust before the implementation was completed. It was then picked up by Temenos.

The system is delivered on a Software-as-a-Service (SaaS) basis. Sofgen, a partner of Temenos, is providing support.

The credit union offers current accounts and loans, including payday ones, and as far as Banking Technology knows, it is the only T24 user in the UK credit union segment to date.

So who might lose out?
A potential loser looks to be the aforementioned Kesho Systems, a long-standing supplier to the UK credit unions. It currently claims to have around 60% of the sector as users of its flagship Curtains system. That translates into around 220 credit unions on the user list.

Ireland-based e-Channel Financial Systems (e-CFS)/Conaccess has 30% of the market (110 credit unions on its user list). Customers include Penny Post Credit Union, which provides financial services to Post Office workers and their families, and community-based credit unions like Kingdom Credit Union in Scotland. The vendor also has projects in the Channel Islands, Ireland and further afield in Africa.

John Nugent, CEO of e-CFS/Conaccess, feels that the biggest challenge for the providers in this space will be the overall contraction of the market in terms of customer numbers, due to the merging and rationalisation of credit unions in the UK.

There is also another well-established vendor, Progress Credit Union Centre. This Ireland-based company has a number of users in the UK, including Kent Savers Credit Union.

Mark Lyonette, CEO of Abcul, commented that the current IT projects have finally “woken up some suppliers” in a sector that had traditionally seen little innovation from a technology perspective.