Blood, Sweat, Data

Decisions related to a core conversion impact every aspect of the institution. What do you need to be aware of when meshing core systems?


Core conversions sometimes feel like a trip to the dentist. They’re inconvenient and occasionally painful, but those who put it off too long will be sorry they did. Clunky, outdated legacy systems can be a bane on operations employees, on IT teams tasked with core maintenance, and on members who want advanced capabilities that work seamlessly within the online suite.

Financial institutions often attempt to navigate around issues with legacy systems by patching on upgrades, but this is at best a temporary solution. While complications can increase costs exponentially, a successful conversion will likely lead to cost savings and increased efficiency. Another factor in a core conversion is timing, as staff divide their attention between member-facing concerns and back office or vendor issues for what could easily be months at a time.

A rolling stone is easier moved than one at a standstill, and times of business transition, like post-merger or acquisition, make prime opportunities to address core changes and return to market better than ever.

United Federal Credit Union ($1.3B, St. Joseph, MI) has reformed and restructured itself multiple times in the last decade, including the 2006 merger between First Resource FCU and United FCU that created the modern entity and the acquisition of struggling Clearstar Financial Credit Union in Reno, NV. It is also set to acquire Griffith Savings Bank in Indiana.

Before this activity, there wasn’t as immediate a need for innovation, integration and flexibility in United’s core systems, says Carly Eldridge, e-Commerce manager. “Aside from online banking, we pretty much went with what the core provided.”

But as the co-op’s footprint expanded to new markets, its organizational complexity required increasingly in-depth core conversions and renegotiations of vendor relationships to achieve desired goals.

United’s experience reveals tips and best practices for managing vendors, staff and members throughout a core system conversion.

“We’ve worked very hard to expand our electronic footprint by adding more self-service options, from online account opening and funding, mobile banking, secure messaging and enhanced online business services,” says Shawn Birch, director of innovation. Many times, gaining robust features and capabilities requires leveraging out multiple core services through a variety of vendors, which means additional time and effort must be spent to manage these multiple relationships.

Instead, United took the opportunity of the core conversion as a chance to streamline its vendor strategy, and find relationships that covered a number of core products and services, rather than individual solutions.

“For key services, they’re more than vendors, they’re your strategic partners,” says Birch. “They’re going to work with you and make adjustments if the service isn’t heading in the right direction or it doesn’t fully support the capability you thought you were signing up for.”

If your provider doesn’t offer that support, seek another partner.

Credit unions have another tool besides vendor expertise during a core conversion: previous experience. The talent and knowledge base of the staff can be helpful for some basic core conversions, but prepare to learn on the fly with more intense swap outs.

“In 2006, we were just folding data from another core system into our own, mapping it from one system to the other,” says Birch. “We had tons of knowledge and expertise, because we’d been on that same system for close to 20 years."

Moving two systems to one new system is very different, Birch says.

“All your expertise goes away and you’re all on equal footing. You’re validating data, redoing documentation and workflows, and taking those procedures you do on a daily, weekly, monthly or yearly basis and making them work on a new system.”

Assigning responsibilities, creating workflows and benchmarking progress is a full-time job, yet member expectations must be fully managed as well. Changing out the core system is an internal and external process as many of the credit union’s most familiar member facing products will change in use and appearance. Not everyone will like what they see.

“We’ve only had one online banking system for the last ten years, and people were very attached to it,” says Eldridge. In the case of merging systems, get rid of the ‘versus’ mentality and consider what components of each system are of value.

“Even though we now have 70% of our members on one core system, we definitely consider the other 30%,” says Eldridge of the upcoming conversion of Clearstar’s core system to United’s. “We don’t want to have to say, ‘By the way, this feature is no longer available.’”

The reality is that any changes, good or bad, will trigger a slight dip in satisfaction for some individuals.

But the damage can be headed off with preemptive employee support and communication of what will change, when and why. This support will need to continue for what could be days, weeks or even months afterward, in order to onboard members completely onto a new system.

Credit unions should hit every channel they can, but understand the contact center will likely be ground zero for managing much of this process post-conversion.

“We prepared our call center extremely well and got them involved in the testing so they knew the new systems well enough to help out,” says Eldridge. “When people run into issues online they don’t get in the car and drive to the branch. They call the call center.”

It’s never easy, and it’s rarely quick, but if properly managed, the longterm benefits of a core upgrade or conversion are sure to enhance the institution and its membership for years to come.