Credit unions rely on their core systems to meet, and exceed, member expectations. Core systems allow credit unions to serve members in technologically advanced ways how, when, and where they want. For this reason and more, changing a core system can be a daunting process. Beginning a formal search, soliciting requests for proposals, choosing a new provider, transferring data, converting the core — whether it is an upgrade or a complete change — and rolling out the system to members can take years.
It’s a sizable commitment that, at some point in its history, every credit union will likely decide is warranted, possibly necessary.
The Conversion Process
Member One Federal Credit Union ($627M, Roanoke, VA) plans to convert its core system by May 2015. The decision to convert is never easy, but the decision is made more difficult when a credit union’s existing core is meeting expectations. Such is the case with Member One. The Roanoke-based institution has been using its Harland core since 1996; however, when the credit union started planning for new capabilities, it realized it needed to look at other providers, too.
“After going through a review and attempting to re-invent our current system to make it fit our strategies, we realized about two years ago we needed to do a formal search,” says Jeff Wieczorek, Member One’s chief information officer. Wieczorek joined the institution five years ago and has helped evaluate both the current system and others on an informal basis since his arrival.
Member One watched as the core landscape changed, not only the compliance requirements but also advancements in vendor offerings. During the search, Member One examined four core systems, including its current one, grading each through a combination of balanced scorecard analysis and client discussion.
“We did go to several vendor-client conferences as well to not only speak with [vendor] management teams but also mingle with the clients and hear some of the things they’re talking about, like if they had concerns or if they felt they were valued as a client,” says Wieczorek.
The credit union selected employees from each department, from retail tellers to HR professionals, to join its 20-member “transformation team.” Together with members of the senior team, these employees filled out balanced scorecards — developed by a third party consultant to negate possible biases — to weigh the importance of vendor offerings in three key areas: technological advancement, ability to meet compliance standards, and price.
“Price was not as high as maybe some would think, but obviously that still weighs into any decision of this magnitude,” Wieczorek says.
Once the team completed the scorecard, the senior team reviewed them based on how it rated the importance of each core system. Then, it looked at the transformation team’s feedback from each demo. Achieving this diversity of opinion helped the credit union make a decision with institutionwide significance.
“We have a collective set of minds that looks at the system differently and uses it differently,” Wieczorek says. “They are able to communicate the benefits or hurdles they might see in that system.”
The credit union also gave each member of the transformation team a call list and asked them to reach out to current clients of vendors under consideration to get a more complete, well-rounded view of the vendor. Team members contact credit union departments that were either identical or similar to their own. During these calls, team members solicited answers to questions such as the quality of conversion, level of training received, customer service and vendor experience, and functional issues lost or gained in the conversion.
The thoroughness and diversity of opinion included in the search helped the credit union confidently cut its list to two. It also increased employee confidence in the eventual choice, knowing that they were a part of the process.
“The organization as a whole having that buy-in will contribute to a successful conversion and commitment from both sides,” Wieczorek says.
After it determined the final two, the credit union invited both vendors on-site for a demonstration and put the decision up to an "overall organizational vote," according to Wieczorek. With the institution's performance reviews in hand, Member One was able to identify the provider it wanted — Symitar — and focus the remaining four months on additional due diligence.
"My due diligence book is about three inches thick," Wieczorek jokes.
The Metric System
“How important is price? How important is [keeping] up with compliance? How important is advancement in technology?” Wieczorek asks. These are the questions a credit union must answer before investing the money, time, and resources into a core conversion.
A primary reason Member One wanted to change its core processor was the lack of control the institution felt it had. For example, the credit union had to rely on the provider for changes and enhancements instead of implementing them itself. With its new Symitar Episys system, however, Member One can change or enhance the system should it feel the need or opportunity. As the system will not be fully implemented until May 2015, Wieczorek did not speculate on future enhancements. Without seeing the system in action or without knowing what the technological landscape will look like in 14 months, answering that question would be premature, he says.
Regardless, the new core will help Member One satisfy a primary goal: creating efficiencies. The new system will help Member One streamline many processes, including adopting the core into its intranet, improving the flow of opening an account, and integrating third-party providers to help it with Office of Foreign Assets Control (OFAC), Wieczorek says.
In addition to the ability to make enhancements, Member One wants to increase opportunities for technology growth and establish a quicker product-to-market turnaround.
“We want to be able to get a think tank together, get a product in mind that we want to offer to our membership or even test pilot it, and be able to turn it around relatively quickly before it becomes old news,” Wieczorek says. “We want [our core] to help us be first to market.”
In selecting a new core provider, Wieczorek and the transition team was looking for a best of breed. That meant finding a core system that could integrate different providers yet still offer seamless processes for membership.
“There’s going to be other companies out there who come out with something that is better and faster and more seamless for our members to use,” Wieczorek says. “We want to be able to adopt that no matter who the provider is.”
Member One has not yet implemented any new core systems, but it has reviewed internal processes and procedures, cleaned up data, and analyzed products to prepare for the change.
“It should be relatively painless,” he says. “[But] core processor conversions are never painless.”