How To Extract Maximum Value From Core Processing

Outside consultants and internal cooperation can help review and recommend ways to get the most from the heart of the technology infrastructure.

 
 

Bill Kennedy is a bean counter, not a technologist, but the chief financial officer at Interior Federal Credit Union ($160.62M, Washington, DC) has been around the block a time or two when it comes to extracting maximum value out of core processing systems.

Or trying to anyway. In a career that has included involvement in three system selections and two conversions, Kennedy says he’s seen plenty of times that credit union staff think their system can’t do something when, in fact, it can, or at least it can “enough to suffice.”

This happens for a lot of reasons, the veteran credit union executive says. “It can be because of turnover, wanting to keep doing things the old way because it’s uncomfortable, or having just one person in charge of integrating and disseminating information,” Kennedy says. “And I’ve seen numerous times where the provider says, ‘Oh, your issue was addressed three upgrades ago.’”

Kennedy is now convinced that a system efficiency/effectiveness audit is the best way to ensure a credit union gets the most it can from the business-critical system itself, the in-house people who run it, and the company that provides it.

CFO that he is, Kennedy also thinks the provider should help pay for it. “It should be in the contract that you get a system efficiency/effectiveness site audit say, every three years, and it should be free or at least at a shared cost,” he says.

The $10,000 to $20,000 a site audit costs is far less than losing a five- to seven-year core processing deal, Kennedy argues. “Losing a client, and the pain of a conversion, when the existing system can indeed, in the majority of cases, have some workable solution seems crazy to me.”

A narrow field for a big job. Jeff Johnson feels the pain. “We don’t always do a good job of going through release notes about how we can best use this and that piece of functionality, but that could be said of any software package,” says the chief information officer at BCU ($2.23B, Vernon Hills, IL).

A longtime leader in credit union technology circles (with the CUNA Technology Council and the CUFX integration standards project as well as vendor user councils), Johnson says he also sees the value of outside audits, but has turned to the source, in this case, Symitar, the provider of BCU’s Episys core platform.

He says BCU extracted some good value from the consulting gigs it paid for, aiming at specific areas like nightly batch processing. “They helped us reorganize some things and we got back about 1.5 hours of online capability,” Johnson says.

Too often we criticize perceived software capabilities without matching the software to well-defined challenges.

As for hiring the supplier itself, Johnson says, “I don’t think we had a lot of good options. This isn’t like SAP or Oracle, big software platforms with thousands and thousands of customers and a lot of outside consultants that have seen a wide range of usage. Our spectrum of experts is really relatively small.”

And as for the bottom line in such an engagement? It’s about getting the most ROI out of the core technology, Johnson acknowledges, “but how do you measure the ROI of air? Without air, we die. Without a core transaction system we cease to exist as an organization.”

Getting something for something. The longer a credit union uses a core processing platform, the more complicated that configuration can get, too. “We’ve been on the same system for 16 years, and the stuff really accumulates in the attic and basement. So, what do you do to get the most out of your system? Clean it out or move, or re-convert on the same system? I’m really tearing my hair out over this,” Johnson says.

Linda Barker and Greater Nevada Credit Union ($563.61M, Carson City, NV) recently went through a conversion but had no choice. Fiserv had sunsetted their previous platform and — working with an outside consultant — they moved onto another Fiserv offering, the DNA system.

Now the focus is on maximizing that investment, says Barker, the credit union’s vice president for information technology. For instance, the credit union has formed a release team, comprising business and technology people who review and prioritize the changes when they come out.

That idea can be extended beyond the credit union itself, adds Idrees Rafiq, assistant vice president of IT consulting at CU Resources, a subsidiary of the Cornerstone Credit Union League that serves Texas, Arkansas, and Oklahoma.

Rafiq points to something as basic yet essential as reporting functions. “We talk to credit unions sometimes that have no idea at all of the file maintenance or dormant account reporting their core systems can do,” he says.

Credit unions need to get one or two employees up and running on that, he says, or they can do what four credit unions in close geographic proximity did when they discovered they were all on the same Fiserv system and encountering a similar reporting issue.

“They formed a discovery committee to decide what kind of reports they needed — in this case they were trying to detect some kind of suspicious activity — and then one of their CEOs as it turns out was on a Fiserv committee about this and he took it there,” Rafiq says.

The result was an open line of communication that led to learning how to filter the data for the needed information and produce the reports that go with it.  “That’s value extraction for compliance,” Rafiq says.

Some struggles, some successes.“We’re still struggling in a few areas,” says Barker at Greater Nevada. “There just wasn’t enough automation, for instance, in things like reconciliation between the GL system and the core. We’ve identified a solution and working on implementation, but it’s very complicated.”

That said, there also are a lot of improved processes and smoother integration with the new core, Barker says, including eliminating duplicate entries. Another nice touch: “Before we would print out two copies of each receipt. Now one still goes to the member but the other one goes out to our storage system and is no longer touched.”

Barker, also an executive committee member of the CUNA Technology Council, advocates taking advantage of what other users have to offer, including user groups and offerings, in her case, from the DNA App Store.

One add-on Greater Nevada bought, for instance, does account pushes like moving perk-laden student accounts to regular offerings when the holder turns 24. “Now we don’t have to manually look those up,” Barker says. “It just automatically happens at the beginning of the month.”

It’s all about the member. Barker says account opening at the click of a button is another feature her new system accommodates. “Improving the online and mobile experience leads to a generally better member experience overall, and so does being able to have that complete view of the member on the teller screen when they come in to the branch,” she says.

That’s the bottom line and the brass ring. “Always start with the member experience dream, or at least the member pain points and then work backwards to the technology,” says Butch Leonardson, the retired CIO from BECU who’s now a consultant with Cornerstone Advisors.

“This gives us a better benchmark for assessing the effectiveness of our IT assets,” Leonardson says. “Too often we criticize perceived software capabilities without matching the software to well-defined challenges.”

Leonardson, who led one of the first major multi-vendor conversions in the credit union space in 2002 while at BECU, also says that credit unions need to take the lead in those relationships. “The quality of our relationships with our vendor partners is most often based on the quality of the leadership we give them,” he says.

 

 

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Dec. 7, 2015


Comments

 
 
 
  • Hits on many underlying core system concerns. Thank you.
    Anonymous