When Idaho State University Federal Credit Union ($150.5M, Pocatello, ID) merged with $17 million Pocatello Teachers Federal Credit Union in 2012, it learned firsthand that big is not always better.
The larger Gem State credit union had originally planned on integrating the smaller institution into its existing core platform, but a year of not being able to get on its vendor’s calendar and prompting from PTFCU staff convinced CEO Robert Taylor to look at PTFCU’s core system — the CUProdigy platform from a small, Utah-based CUSO called Credit Union Data Processing.
CU QUICK FACTS
Idaho State University FCU
HQ: Pocatello, ID
Data as of 06.30.14
12-MO SHARE GROWTH: 7.7%
12-MO LOAN GROWTH: 7.0%
“I knew it would be considered weird and unusual to switch to the smaller credit union’s platform in a merger, but it’s proved to be one of my biggest professional lessons,” Taylor says. “There’s a certain arrogance we often have about smaller credit unions that can be quite misplaced.”
Other lessons from ISUCU’s merger with PTFCU include to identify internal champions for the conversion, not expect members to realize what’s happening until after it’s happened, and to be ready for some hands-on work with the data.
The Right People
Data consolidation is typically the last step in a merger, and in this case, it took months to finish the process. The credit union had been running both systems for several months and tellers already were familiar with them, but lending, accounting, and collections staff also had to be brought up to speed.
“Our project manager was an IT person who didn’t necessarily have the best understanding of what the front-line people are seeing,” Taylor explains.
So he promoted a former PTFCU branch manager to ISUCU operations manager and put her in charge of much of the process, including training.
The Right Data
CUDP installed a new system at ISUCU and converting the data to the new core was a somewhat manual process that involved both the CUSO and the credit union.
“There was no help from our old core system extracting data,” Taylor says. “We had to go it alone.”
CUPD and credit union staff — including managers and two IT staffers — spent nearly six days pulling core data into the new system and cross-checking it with the old system. They also manually moved bill pay data on approximately 800 members at the former PTFCU rather than pay roughly $100 per member to do it electronically, Taylor says.
Now, Taylor says, his credit union can easily extract varied data sets. That ability enables it to complete robust reporting and run its own debit card rewards program off the core instead of paying for one from a third party.
There’s a certain arrogance we often have about smaller credit unions that can be quite misplaced.
Which leads to another takeaway: Besides choosing a core system that can accommodate multiple vendor add-ons, choose add-ons that themselves can integrate with multiple cores.
“That way you can keep the same interface if you switch cores,” Taylor says.
Thousands Of Calls
The new home banking look and authentication steps took the members some time to adjust to.
“That change involved about 7,500 members,” Taylor says. “In the first few days we got a couple thousand phone calls despite the emails, website notices, and direct mail we sent. It was like it had no effect.”
To accommodate for other changes, ISUCU tried to keep the process simple. For example, when it came time to change the account numbers for the former PTFCU members, the credit union added a prefix to the previous number.
Life After Merger
“For months we kept waiting for the other shoe to drop, but it never did,” Taylor says. “Life after merger has been good.”
He says that’s especially true compared with a merger at another credit union in which he personally spent an entire night “trying to get the loan forms mapped so we could start lending the next day.”
Although ISUCU put in plenty of work before the consolidation, Taylor now says now as the last pieces of the merger conversion puzzle are falling into place that it all went pretty smoothly, with only some re-learning on how to complete balance sheet reports.
“It was second nature to us before,” he says. “And it will be again.”