Build, buy or partner: How credit unions are evaluating data analytics solutions for 2025 and beyond

In today’s digital landscape, credit unions must decide: should they build, buy, or partner for their analytics ecosystem?

Taking your raw data and turning it into business intelligence takes a lot of steps and requires a lot of different skills too. As a credit union, you have a decision to make. Do you want to focus your time on making data-driven decisions, or do you want to rebuild the wheel for a fully custom solution? Neither option is necessarily right or wrong, but you’ll want to account for the time, talent, and resources it will take for each option.

If you can expedite your time to actionable insights, then you’ll spend more time serving your members and growing the core business. Take a look at the graphic below, where would you prefer to spend 80% of your time and resources if you had the choice?

1. Build: Creating your own system

Building your own analytics system is like constructing your own car. It’s possible but challenging, requiring high costs, specialized skills, and ongoing maintenance. This option demands significant investment and expertise, which means more full-time employees (FTE’s), a higher Total Cost of Ownership (TCO), along with continuous updates and upkeep.

For very large credit unions with ample resources, building a custom solution can make sense. Think of those specialized mechanics who can build their dream hotrod in their garages. They have the expertise and resources to create a custom solution that perfectly fits their needs (and they probably don’t have a day job to tend to either). However, it’s important to consider that if key staff members who created the solution leave, the technology may become a “black box” that’s difficult to update and maintain.

Pros: Full customization, control, leverage existing talent, lower technology costs

Cons: Time-consuming, higher FTE costs, complexity, higher risk of delays or failure, not planning for the future

Cost factors: Infrastructure, development time, maintenance, training

2. Buy: Purchasing a pre-built solution

Buying an analytics system is similar to buying a car. You may be in the driver’s seat to navigate your roadmap, but there is no consistent support or expertise to help you reach your destination. Buying a short-term solution offers convenience and faster implementation but might not fit all of your needs perfectly. There’s also the risk of vendor lock-in, which limits flexibility and future-proofing.

Buying a limited analytics system also carries the risk of vendor failure. If a vendor falls short, you may have to switch providers, incurring initial costs repeatedly without the consistent support and reliability that comes from a true partnership. If you end up implementing a licensed solution on your own hardware, you’ll also need to allocate resources to maintaining and upgrading that over time as your data volume and demand grows.

Pros: Speed, control over technology stack, build institutional knowledge

Cons: Implementation speed, vendor dependency, integration challenges, unforeseen costs, cybersecurity

Cost factors: Licensing, setup time, support, training

3. Partner: Leveraging managed services

Partnering with a managed service provider is like using a community transportation system. With a skilled conductor at the helm, you can spend your time on more important tasks now that you don’t have to drive at all. This option uses shared resources, continuous R&D, high-security standards, and expert management. You can focus on collecting reliable, efficient analytics, taking in the vistas of your business analytics, without the need for individual investment.

Ideally, when you find the right partner, they’ll have already faced and overcome challenges that other credit unions have faced. Partnering with a managed service provider offers the best of both worlds: shared resources, continuous innovation, and high security.

Credit unions should consider the long-term benefits of a partner solution, ensuring they stay ahead in the digital age. By partnering, credit unions can optimize their resources, enhance their analytics capabilities, and focus on their core mission of enriching financial wellness.

Pros: Domain expertise, faster implementation, easier integrations, predictable costs over time, risk mitigation, scalable, learning from peer customers

Cons: Higher initial cost, less customization, one-size-fits-most

Cost factors: Subscription licensing, support, training, consulting hours

Maximizing value: The benefits of partnering

Partnering offers numerous benefits for those institutions that need data-driven insights, but are not large enough to effectively build their own solution: efficiency, cost-effectiveness, continuous improvement, and superior security.

1. Efficiency and cost-effectiveness: Partnering reduces the significant upfront costs associated with building your own system. Ongoing maintenance and updates, which can be resource-intensive, are managed by the provider. This minimizes recurring maintenance costs, allowing IT resources to focus on revenue-generating activities instead of system upkeep. Economies of scale come into play as well.
2. Continuous improvement: Managed service providers are dedicated to staying ahead of technological advancements. They invest in continuous R&D, ensuring your analytics system remains cutting-edge without additional effort on your part. This constant innovation helps you stay competitive and compliant with evolving industry standards.
3. Superior security: Managed service providers prioritize high-security standards, such as SOC 2 Compliance. They implement stringent security measures and regular audits to protect your data. This is particularly crucial for credit unions, which handle sensitive financial information and must comply with strict regulatory requirements.
4. Resource optimization: Building and maintaining an in-house system diverts IT resources from strategic initiatives and other revenue-generating projects. By partnering, your IT team can focus on leveraging analytics insights to drive business growth and improve member experiences, rather than getting bogged down by technical maintenance.
5. Scalability and flexibility: Partnering offers scalability that can adapt to your evolving needs. Whether you’re expanding services or integrating new data sources, a managed service provider can seamlessly scale your analytics capabilities. This flexibility ensures you can grow without the limitations of a rigid, in-house system.
6. Vendor expertise: Managed service providers bring specialized expertise to the table. Their dedicated teams have deep knowledge and experience in data management and analytics, providing you with access to top-tier talent without the need for extensive training or hiring. Finding a managed service provider who understands your unique needs as a credit union customer and has that expertise can be difficult, but is not impossible.

Wrapping up

Whether you’re in the market to build an in-house solution, implement someone else’s technology, or find a long-term partner, make sure you are laser-focused on your end goal first and then choose the path that suits you best. Credit unions should also consider evaluating specialized CUSOs as partners that focus on solving the unique challenges of our industry. These CUSOs, driven by credit union investors, maintain a shared sense of credit union values and mission-driven purpose, helping to better serve your members.

Visit our CSS website to learn how Arkatechture can help you drive membership growth and operational excellence at an attractive price.