Abcul slow on technology modernisation project; first credit unions to go live before year-end

The Association of British Credit Unions (Abcul) is yet to go live with its new shared core platform for its members, a project it has been working on for over two years.

The UK government is behind the Abcul project, 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. Banking Technology has contacted Abcul to find out more about the investment and the money already spent, but received no response.

At the heart of the project is a shared Software-as-a-Service (SaaS) platform that runs on Fiserv’s Signature core banking system. It is delivered as part of the broader Agiliti solution provided by Fiserv. 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 contract with Fiserv was signed in mid-2014. AT Kearney advised on the selection. It is understood that other bidders for the contract were TCS Financial Solutions, Kesho Systems, and Temenos (in partnership with HP).

The offering is not obligatory for the Abcul members. Around 35 credit unions out of 200+ Abcul members have signed up for it so far.

The first go-lives were anticipated before the end of 2015, but to our understanding, not one credit union is live on the system yet.

Abcul tells Banking Technology that “all the systems associated with the banking platform are undergoing rigorous testing, and the first credit unions will migrate later this year”. Among them is believed to be Kent Savers Credit Union, a long-standing client of Ireland-based tech vendor Progress Credit Union Centre.

The organisation anticipates the “growing numbers” of takers once the platform is up and running.

Good things come to those who wait?
Banking Technology contacted Abcul for an update and following over a month (!) of waiting, received a response. We then followed up with further questions to clarify the statement (as most of the original questions were ignored), but after waiting in vain for another month to hear back, our team has decided to proceed with the publication.

In its statement, Abcul says it has created a subsidiary, Cornerstone Mutual Services, “to develop and manage the range of products and services which will help achieve the project’s goals”.

Cornerstone’s Model CU brings together a range of facilities, including the new banking platform. “As with any new banking technology project, a number of hurdles and barriers have had to be cleared along the way which have seen the process take a bit longer than planned,” reads the statement.

“This has, of course, been a common experience for many new entrants in the banking and financial technology fields in recent years.”

Cornerstone’s procurement hub, according to Abcul, “has delivered significant savings for credit unions through collective purchasing of a variety of services such as payroll, stationery, print and washroom services. Costs in some categories have been reduced by up to a third, and the average annual saving for each participating credit union is almost £5,000.”

Of the projects delivered, Abcul highlights the Automated Lending Decision (ALD) tool, now used by 68 credit unions.

“ALD has been a great success, with its users growing their loan book more quickly than the rest of the sector, while simultaneously reducing bad debt to below the sector average,” the organisation states.

Also, the project has funded 88 local marketing campaigns, “which have identified the most effective methods of attracting consumers and recruiting new members, and have ultimately quartered the average cost per new member of previous marketing strategies”.

Another major deliverable is “a landmark agency banking arrangement with one of the UK’s major clearing banks”, Abcul says. Banking Technology understands this is Lloyds Banking Group. “It gives credit unions adopting the Cornerstone Model CU access to the payments system, their own unique sort codes and straight-through processing (STP) of transactions, faster payments and a range of more efficient processes.”

Going mobile
Abcul says its Cornerstone subsidiary is developing a new mobile banking app, through which members can instantly check balances, transfer funds, make payments and apply for loans.

“The ability to apply for a loan via the app, receive a quick decision through ALD and fast access to the funds in their account means credit unions will be able to offer the convenience, speed and accessibility which consumers want – but with much lower interest rates and a more ethical approach to lending than some other providers,” Abcul promises.

UK credit unions: modernise or bust
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? Click here to read our comprehensive round-up.

There is also a new core system on the block, developed by local vendor Perception. Perception is building a new comprehensive platform for credit unions, community development financial institutions (CDFIs), loan companies and start-up banks.