As Credit Unions' Legacy Systems Age Out, Is a Turning Point Near for Core Conversions?: After years of maintaining existing data processing due to the cost and risk involved in making a switch, now some are starting to wonder if the greater risk is waiting too long to make the change.

For many years, U.S. credit unions and banks have been reluctant to replace legacy core systems, largely due to the cost and risk involved and the sheer scope of the endeavor.

But signs abound that financial institutions increasingly view the risk of not replacing legacy systems as greater than any risk they may incur by doing it.

"I would say we are reaching a tipping point," said Peter Olynick, senior practice lead for retail banking at NTT Data Consulting. "Five or 10 years ago bankers would have probably said they have less risk staying where they are."

NTT surveyed more than 100 bank executives this year on the topic, and a majority said their current systems don't allow them to adapt to rapidly changing market landscape, Olynick said.

"Antiquated legacy systems are impeding the ability to pursue growth opportunities, improve customer experience and mitigate operating risks, as well as support digital banking needs," he added. "Legacy core platforms are an anchor on [banks'] ability to be innovative."

GETTING THE LAY OF THE LAND

Still, while many CUs and banks now acknowledge the need to replace legacy core systems, they are just getting to the "assessment" phase, and may not have the technology in place for several years, Olynick said. Financial institutions that were early on the curve of installing modern core systems will have a competitive advantage, he added.

"The handful of banks that have already made the investment are going to be in a much stronger position," he said.

That handful includes Moline, Ill.-based Vibrant Credit Union, which went live...