A small credit union in western Pennsylvania is making an investment that would strike fear into the hearts to bankers everywhere: core replacement.
Washington, Pa.-based Chrome Federal Credit Union — formerly Washington Community Federal Credit Union — is replacing its Jack Henry Symitar system with a core from Nymbus, the splashy core banking startup that debuted at Money20/20 in 2015.
Chrome has undergone significant changes under CEO Christopher George. It rebranded its branches as stores — Wells Fargo recently did the opposite — because, George said, “They are conversational, not transactional, and built on the retail model. We’re not competing with other banks, we’re competing with Google and Amazon.”
This sort of talk has become familiar in the innovation space, but a CEO willing to swap out his core is putting his money – $250,000, to be precise — where his mouth is. “We needed to develop a digital-first model — 8 of 10 customers were never coming in to the branches,” George said. “We also expanded our charter from two counties to five.”
Jack Henry’s Banno unit has built some sexy websites, but it could not satisfy George. “That Utopian online mobile platform, we couldn’t do that through our core,” he told Bank Innovation. “We were tired of the client-server model and having our data held hostage, or being told, you can do it, but it’s going to cost you. So we looked for new opportunities. We tried everything, Symitar, Banno, Q2, Backbase, but it wasn’t stacked, it was still siloed.” George noted that Jack Henry was five years out from where Nymbus is now.
Ted Bilke, president of Jack Henry & Associates’ Symitar division, told Bank Innovation via email, “At JHA, we’re advocates of open integration — clearly exhibited by our vast number of third-party integration points. In some unique cases, we unfortunately cannot be everything to everyone. With today’s changing digital and client-first environment, we are committed to providing our clients with the data they need along with a modern digital experience.”
George began the Chrome rebrand two years ago, but has yet to take it to market. That will wait until the core conversion is completed in 2017. The company was originally a credit union for Washington Steel, a company that operated from 1945 through 1992, and its influence lingers in the area. The credit union later became Washington Community FCU. “You make steel by combining iron ore and chromium. So with Chrome, we are keeping our roots.”
The credit union is now $170 million in assets, up from $80 million a few years ago, and has 18,000 members. It will roll out in seven counties by mid-2017, George said.
David Mitchell, president and chief revenue officer at Nymbus, said, “Core conversions are extremely easy. I’m kidding of course. “There has been only 520 core conversions on average the last five years per year, across thousands of banks.” across thousands of banks.” There are as many as 5 or 6 thousand banks in Nymbus’s sweet spot, Mitchell said. Nymbus is barely a year old, but has more than 30 bank clients. It grew by buying Sharp Bancsystems in Bedford, Texas, and acquiring the banks on its systems.
Paul Schaus, CEO of the bank consultancy CCG Catalyst, disputes Mitchell’s figures (Mitchell originally said had been just 520 conversions in the last 20 years, but he revised his quote after publication.) “Between all banks that would be closer to 130 per year (old vendor to new vendor),” he wrote Bank Innovation after this story was first published. “This is not taking into consideration M&A activity or conversions from same vendor core product to another core product. Credit Unions would have similar numbers.”
Mitchell described the Nymbus solution as “a full reference platform based on HTML5 and Java and hosted in a private cloud. We don’t sell in-house.” Third-parties systems can be plugged in 30 to 60 days, and sometimes less. Nine of Chrome’s 14 third party systems have already been integrated.