WASHINGTON-A company that invested $80 million and then gave away its product before ever seeing a return may know a thing or two about the new world of business models to which credit unions must adapt.

Open Solutions, the Glastonbury, Conn.-based data processor, has now completed installing its DNA core solution in all of its credit union clients. Open Solutions spent $50 million developing the solution, and then another $30 million to provide and install it with clients at no cost.

The decision appears to be seeing a payoff. The company is reporting that it has won the business of 18 of the last 25 CUs of more than $1 billion in assets that have made a core data processing solution decision. Half of its remaining clients have assets of less than $200 million, Open Solutions reported.

The company has also rolled out another service indicative of a new market reality. Similar to Apple iStore, Open Solutions has distributed a free DNA Creator Toolkit to client institutions that allows them to write their own code and to either offer it free to others or sell it to generate new revenue.

"We have created a collaborative network that allows anyone to create off of our platform," Open Solutions chairman and CEO Louis Hernandez, Jr., told Credit Union Journal recently. "Most don't expect that. You are encouraged not to make changes. We lead with this because this industry needs to be dramatically more innovative at a dramatically lower cost. DNA reduces apps by 55% at some CUs. In the traditional model you tell me what you want, I sell it to you and then you pay me maintenance fees while I fix it. With DNA Creator, you create your own extension packs. You can post it and give it away, or you can sell it and split the revenue with Open Solutions. We call it the Open App Store. You can do it alone, or with another credit union, or with a vendor. We also use a network of developers to see if someone else can do it less expensively."

Market Is Slowly Improving

Hernandez, who reported Open Solutions new bookings in Q4 2009 were double those of the same period one year earlier, said he believes the market overall is slowly improving. As for why the multi-billion-dollar CUs have moved to the Open Solutions' platform, Hernandez suggested it has to do with the capability of expanding services and locations while still reducing staff and other costs. "The payback is more immediate."

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