Continued credit union consolidation
The credit union industry has undergone significant consolidation over the past decade. According to LEK Consulting, the number of federally insured credit unions dropped below 5,000 by 2023, as smaller institutions merged to gain the scale necessary for technology investments.
Despite this consolidation, credit unions maintained consistent asset growth for nearly a decade — until 2024. Total assets contracted to $2.32 trillion in Q2 2024, marking a 0.4% decline and ending a nearly 10-year streak of continuous growth.
In response to mounting pressures, credit unions have ramped up bank acquisitions. These acquisitions are reshaping the Credit Union landscape but also introducing operational complexities.
The key to successful acquisitions
Mergers and acquisitions present a major opportunity for credit unions by allowing them to expand their market presence and product offerings. However, integrating new institutions can be a major challenge. Lengthy system migrations, data standardization issues, and employee frustrations can delay the full potential of an acquisition.
Credit unions need the right technology to seamlessly integrate acquisitions – eliminating costly delays and getting new products and services to market faster. Here are three critical areas to focus on when preparing finance systems for growth
- Data & Systems: Can you easily ingest, standardize and transform data from any core banking, treasury and/or ERP system without manual workarounds while maintaining an audit trail?
- Accounting Logic: Can you consolidate multiple accounting frameworks while managing GAAP, statutory, and tax books from a single, trusted data source?
- Regulatory Reporting: Can you ensure compliance with capital adequacy, liquidity, and financial regulations without introducing risks from manual adjustments?
Fynapse is a finance data management platform with subledger and accounting hub capabilities that simplifies these challenges, enabling credit unions to modernize their finance architecture without the costly and time-consuming overhaul of a full ERP replacement.
Data and systems: Fynapse transforms financial data management
Fynapse streamlines financial data management by bringing all relevant financial information into a single, accurate source of truth. It seamlessly integrates with any core banking, treasury, and ERP system, eliminating data silos and ensuring finance teams have real-time access to clean, reliable data without the need for a costly ERP replacement or reengineering effort. CFOs gain instant visibility into financial performance, allowing for faster, more informed decision-making without the delays of manual reconciliation.
With built-in automation, Fynapse simplifies data ingestion, standardization and transformation. Financial data flows seamlessly from source systems to reporting tools, allowing finance teams to work with fully reconciled, high-quality data. This removes the risk of human error and allows finance teams to close the books faster and focus on delivering valuable insights that drive business strategy
For credit unions acquiring community banks or credit unions, Fynapse removes integration headaches by integrating with common credit union systems like Temenos Transact, Symitar, Finasoft and SAP for Banking. No matter what systems the acquired organization uses, Fynapse can easily bring in the data and apply the preferred accounting frameworks, making mergers smoother and more efficient.
Accounting logic: Simplification and automation
When credit unions acquire other credit unions or banks, automating and streamlining accounting processes can be a challenge. Each institution may use a different chart of accounts, accounting policies, and/or reporting formats, making it hard to standardize financial statements. Many credit unions struggle with manual journal entries, reconciliation delays, and a lack of transaction-level detail, hindering accuracy and compliance across financial and regulatory reporting.
Fynapse solves this by automating and streamlining accounting processes with a real-time subledger and a configurable accounting rules engine. It centralizes financial event processing, ensuring that accounting rules are applied consistently across all transactions. This reduces the need for manual adjustments, improves data accuracy, and provides clear audit trails—essential for credit unions managing acquisitions.
Maintaining granular financial data for greater control
Unlike traditional systems that summarize financial data too early, Fynapse retains detailed, transaction-level data before sending entries to the general ledger (GL) or enterprise performance management (EPM) systems. This level of detail is crucial for managing complex financial processes, including:
- Loan and investment accounting
- Regulatory calculations
- Multi-GAAP financial reporting
By shifting complexity out of the GL and into the subledger, Fynapse simplifies reconciliation, speeds up the financial close, and makes GL modernization easier.
Ensuring compliance and reducing manual work
Fynapse supports multi-GAAP accounting, allowing credit unions to manage GAAP, statutory, and tax books within a single platform. This eliminates the need for custom adjustments in the GL and ensures compliance with all applicable accounting frameworks. Whether handling loan impairment calculations or investment portfolio adjustments, Fynapse applies standardized, fully auditable accounting treatments.
For credit union CFOs, this means greater accuracy, control, and transparency in financial reporting. With automated journal generation, detailed transaction tracking, and built-in compliance, Fynapse accelerates the close process and reduces reconciliation efforts, ensuring smoother financial operations after an acquisition.
Regulatory reporting: Addressing compliance complexities
When a credit union acquires another credit union or a bank, it also takes on new regulatory requirements. These may differ from its existing compliance framework. For example, credit unions follow NCUA regulations while banks follow FDIC, OCC, or state banking regulations. This means financial reporting structures must be aligned, which can be complex.
Additionally, integrating two institutions with different risk models requires attention to compliance with regulations like Basel III, CECL, stress testing, and liquidity coverage ratio (LCR). Merging financials also impacts capital ratios, liquidity calculations, and risk assessments, all of which must be accurately reported to regulators.
Fynapse simplifies compliance
Integrating an acquisition’s financial data is challenging when dealing with different core systems, reporting formats, and regulatory frameworks. Many credit unions struggle with:
- Inconsistent financial data from different institutions
- Manual reconciliations that delay regulatory filings
- Limited visibility into combined financial and risk positions
Fynapse streamlines compliance by centralizing financial transactions and automating financial controls. This ensures that all acquired data is validated, structured, and reconciled before reaching regulatory reports. This means:
- A single source of truth for both institutions’ financial data
- Automated tracking of transactions, from source to final ledger
- Built-in auditability, making it easy to verify reported figures
With real-time monitoring of financial and risk indicators, CFOs can identify potential compliance risks early and address them before they become issues. By eliminating manual adjustments and reconciliation bottlenecks, Fynapse ensures that finance teams can quickly integrate acquisitions while maintaining regulatory accuracy and financial stability.
