Tips From The Operating Table

After a make-or-break core conversion in 2012, Orion FCU shares strategies and best practices to help other credit unions navigate the process.

 
 

When the NCUA appointed Daniel Weickenand as CEO of Memphis Area Teachers' Credit Union, it tasked him with one job: Turn around the ill-performing credit union. Not long after Weickenand's arrival in 2010, the credit union's core provider sent a plaque in celebration of the duo's 25-year relationship. The gesture, although nice, was a wake-up call.

After nearly three decades in operation, the clunky, outdated core system was holding back the credit union. So in 2011 — the same year the $531 million institution rebranded as Orion Federal — the credit union signed a new contract with Corelation Inc. On Labor Day weekend 2012, it went live on the new system.

CU QUICK FACTS + TECHNOLOGY PROFILE:

  • Orion Federal Credit Union
  • HQ: Memphis, TN
  • Assets: $531M
  • Members: 54,526
  • 12-MO Share Growth: 3.56%
  • 12-MO Loan Growth: 28.67%
  • ROA: 0.51%
  • Data Processor: Corelation Keystone
  • Data Warehouse: Corelation Keystone
  • Home Banking: First Data
  • Bill Payment: First Data
  • eStatement: Harland Clarke
  • Mobile Banking: First Data

With the seeds of a technology turnaround officially sown, Orion has spent the past 12 months enjoying 3.6% share growth and incredible 28.7% loan growth — performance Weickenand attributes directly to the streamlined processes provided by the new core. Here, Weickenand shares insights gained from the credit union's conversion as well as the do's and don'ts of any major core change-up.

How essential is a core system to the functioning of a credit union?

Daniel Weickenand: It's hugely important. For us, the core should encourage simplicity. I'm looking for limited keystrokes, because limited keystrokes mean limited opportunities for errors and reduced costs. I believe, especially nowadays, that credit unions need to be as efficient as possible, and we use the core system to transact all our business.

When did you realize it was time to update the core?

DW: I joined the credit union in a turnaround situation. As soon as I got in I said, "Show me the core system." That's when the realization happened. We had to work on people and processes first and then the system.

What were the difficulties of the legacy core?

DW: We had the core, but we needed all these ancillary systems to deliver the final product to the member. We had server upon server upon server, with a system for accounting, a different system for lending, and so on. With so many servers there were additional maintenance costs, software updates, and so many points of potential failure.

Simple transactions were also far too complicated. I transferred my loan to Orion when I first came over, and it took me two to four hours to get all of the paperwork to the point where I could finally sign something.

It was also really difficult to bring in people and train them. The system we're using now has been amazing in that regard. When we hire someone, they adapt to the system quickly. A lot of core systems out there are very clunky — they've grown too big and there are layer upon layer of patches. One update might knock out something you had in place before. For us, this new system was all about creating efficiency.

How did you convince your board that a core conversion was necessary?

DW: Fortunately, one of my board members at the time was a former FedEx IT person. When I explained why we were going in this direction, he got it because that company is one of the brightest when it comes to innovation and technology. So that was easy on my part.

I've told others in the past that conversions are like major organ transplants, you either come through the operation a lot healthier or they're kicking dirt on you. There's no in between. There might be a couple rough patches, but generally you should be healthier on the other side than you were before. It is a big deal though. There have been a lot of CEOs who have been fired over this sort of thing.

How did you determine what the credit union needed from a new core?

DW: We had a few of the leading players come in and present to a cross-section of employees, managers, and executives from the credit union. I've been through a few conversions, so I knew what to expect, but I also wanted input from an end-user's perspective. We looked at analytics, the benefits, and the opportunities of each system.

With Corelation, we got to be on the ground floor of production. We helped define how the system should work. That was incredibly valuable because in a turnaround situation, margins are thin and you can't afford the high costs of customizing a system. A lot of systems will customize it for you, but they're going to charge you and there will be maintenance costs. You get nickel and dimed with a lot of legacy systems. That was something I was trying to get away from.

How did you prepare to go live with the new system?

DW: We signed the contracts a year prior to going live. For that year, I put a person in charge of this project who reported directly to me. She was the hammer to let me know if people weren't doing what they were supposed to be doing along the various stages.

We also had three mock conversions prior to the real one. We took key players in each area of the credit union and had bi-weekly meetings about where we were on all these checklists. Once we got within six months, we had weekly meetings plus conference calls with Corelation. You have to make sure you set timelines and hold people accountable, not only on your side but also on the vendor side.

How did staff react to the new system?

DW: They were appreciative once they saw how much easier it is. We used to have an employee doing end-of-day and end-of-month tasks, and he would sometimes work until 2:00 or 3:00 in the morning finishing up. It was ridiculous. Now it's all automated, he's just checking his pager and looking at his laptop to make sure the whole process is going through.

How did you explain the conversion to members?

DW: If you don't get out in front of it and explain the changes to members, you're making a major mistake. You have to communicate and prepare them in case there is a disruption, because again, you're taking your cards, your home banking, and all these different things offline when you go through the conversion. That first week, you're getting a whole lot of calls from people asking questions, but as long as their money is in their account and they can see their balance, they're pretty much okay.

What other advice do you have for credit unions considering going through a core conversion?

DW: Plan and prepare upfront and then hold people accountable. The most important role in a conversion is the project manager who reports directly to whoever is in charge. It's got to be someone outside of IT who is solely a project manager and is going to make sure people are doing their jobs.

There are institutions that rely too much on the core providers, whether it's Fiserv, Symitar, Corelation, or whoever. They say, "Okay, we paid for the conversion, let's do it," and then they relax. That is not the time to relax. A conversion requires your full attention, no matter whom it's with.

At A Glance: The Six Major Benchmarks In Orion's Conversion Process.

Hire
2Q 2010

Daniel Weikenand is hired as CEO after a national search by Orion’s board of directors.

Evaluate
1Q 2011

Orion decides to convert its core and spends the next 6 months interviewing providers and looking at demos.

Decide
3Q 2011

Orion signs with Corelation, Inc.

Communicate
1Q 2012

The credit union starts communicating about upcoming changes with members through statement inserts, notices in the branches, and website postings.

Test
2Q 2012

Orion undergoes three different test runs on the new system.

Finalize
3Q 2012

Conversion occurs over the Labor Day weekend and the new core system goes live.

 

 

 

Jan. 13, 2014


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