Prioritizing data in core conversions
When undergoing a core conversion, bankers often assume that they need to convert, import and then integrate all of their archive data within the new production system. But many don’t realize that integrating all of this data is incredibly costly, time consuming and, more often than not, unnecessary.
While a bank is required to keep archive data on hand, not all of this data needs to be integrated and accessible in the bank’s new production system on day one. Before jumping into the integration process, banks should carefully identify the importance of each system archive and data type to determine whether it is worth the time and expense to import it into the new system.
To determine what information is most important, banks should first categorize their data based on business requirements and importance to end users. Bankers must ask themselves: Where is the data coming from? Where does it need to go? What is the total cost of ownership for keeping it through the required archive period?
Some of the most important data that banks are required to keep typically includes one year’s worth of check images, all signature cards and all open commercial loan documents. As a result, bankers make it a high priority to immediately integrate this data within the new system. On the other hand, while it might be nice to be able to access seven years of check image history on the new system, this data does not necessarily need to be fully integrated within the bank’s new core system and ancillary systems.
Data can generally fall into one of two categories: “must have,” meaning data that banks are required to keep for a specific period of time based on compliance, audit, and regulations (even though this data will be rarely accessed); and then “nice to have.” Bankers must have a plan for each of their data types, as check images, reports and document images each have their own set of compliance and archive requirements. They may need to research certain data types long term, but don’t need the added expense of importing this data into the production system.
Reducing the amount of data that banks have to convert, import and integrate into a new production system significantly reduces time and costs – both upfront conversion costs and long-term storage and access costs. For instance, if the new system is in a service bureau, then the bank may be charged for closed accounts and a per-gigabyte price for all stored data, so it may not want to import all check image data. But what do banks do with the rest of their archive data that they rarely access, but are still required to keep?
This remaining legacy data can be maintained in a separate, less expensive, near-line archive, meaning data is stored onsite on removable media so that it is still readily accessible to those needing access to the data for research. This is a much more cost-effective strategy than converting and importing everything into the new production system. In a near-line archive, everyone in the bank can still access the data through a non-core system, but this access does not impact the production network and eliminates the need to keep the legacy systems around for the long term.
The good news is that once a bank develops a strategy for the most cost-effective archive and access, this plan can be used for any future acquisitions or system conversions. Banks will only have to make slight tactical changes based on where the data is coming from. A bank’s organizational processes, timeline and communications surrounding a data conversion will vary depending on whether the data is coming from a service bureau or in-house, and whether the data is going into the production system or the near-line legacy archive.
Ultimately, banks should only take the minimum required amount of data into the new production system that is needed to satisfy business and client research requirements. A bank’s compliance officers and business officers must work together to map out the most cost-effective and efficient way to take the least amount of data into the go-forward system, without impacting the customer or the business line’s compliance.
Mr. Bishop is the president of Birmingham, Ala.-based Integrated Legacy Solutions, which provides legacy image and data migration and conversion software and services to the financial industry. He can be reached at [email protected].