In-House Vendors vs. Third-Party Vendors: What's Best for Your Credit Union?
There are a lot of decisions to make when it comes to credit union systems; some of the most important are deciding which vendors to work with. In-house vendors and third-party vendors both have their own set of benefits, so how do you decide which is best for your credit union? In this blog post, we will explore the pros and cons of each type of vendor and help you make the decision that's right for your institution!
The Benefits of Choosing an In-House Solution
Most core processors come with a laundry list of In-house solutions. Often, these are bundled into a basic service package. These integrations may be coded by the employees of the core themselves, outsourced, or even white-labeled from a third-party vendor. In-house solutions can include almost every type of core application, from audio banking to secure document storage.
Pros:
Improved Communication: Because your core processor manages in-house solutions, you'll communicate with your core for customer and technical support.
Core Integration: Your core processor will integrate in-house solutions directly into the core. No third-party portals. No exported files to process.
Lower Cost of Use: Generally, in-house solutions are cheaper than third-party vendors.
Simplified Billing: Your in-house integrations will be billed along with your monthly core processing invoice.
Cons:
Limited Functionality: In-house solutions are often basic and may not give you the extended functionality of an external vendor.
Fewer Updates: Often, in-house solutions are not updated as often as vendor software.
Disaster Recovery: You will be left with ensuring you have a very robust Disaster Recovery plan.
Time: You will be responsible for the sending/receiving of files throughout the day and more than likely, after-hours.
The Benefits of Choosing a Third-Party Vendor
A third-party vendor is an outside company that provides services or software to credit unions. These companies are not affiliated with any core processing system. Instead, they work with multiple cores to provide their services.
Pros:
Best-of-Breed Functionality: Third-party vendors offer the most comprehensive feature set.
More Updates: Because their business model is based on selling their software, third-party vendors are usually quicker to implement new features and functionality.
Better Support: Many times, you're dealing with a company whose only business is providing the service or software you're using. This means they have more resources to dedicate to customer support.
Cons:
Increased Complexity: With a third-party vendor, you're dealing with another company. This means more contracts, more invoices, and more communication. Also, the software may only be accessed by a stand-alone portal making it more challenging to master and use efficiently.
Core Integration: Third-party vendors often need to be integrated into your core processor. This can add complexity and cost to your operation.
Making a Decision
When it comes to deciding which type of vendor to work with, it really depends on your credit union's specific needs. In-house solutions are usually cheaper and more integrated, but they may be lacking in terms of functionality. Third-party vendors often provide more comprehensive solutions, but they can be more expensive and complex to work with.
The size of your credit union should dictate which route you should go. If you're a smaller credit union, an in-house solution may be the best option. If you're a larger credit union, you may have the resources to manage a third-party vendor.
Ultimately, the decision comes down to what's best for your credit union. If you need a basic solution that is quick and easy to use, an in-house solution may be the way to go. However, if you need extended functionality and are willing to pay a bit more for it, a third-party vendor may be the right choice.
We are here to help you cut through the details, with a no-pressure conversation we can assist you in this research. sales@espsolution.net.