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Making the best of core conversions

Jul 20, 2016 / Consumer Banking / Technology

Most bankers tend be risk-averse and so they are slow to change. Yet, there comes a time when the decision must be made to upgrade core technologies. There are two driving factors as to why a bank may need a new core platform: either the technology is not adequate to handle current (and future) demands, or there is a broken relationship with the core vendor.

Some banks evolve in their business plans and need more than the current solution set that their core platform offers, or will be offering. For instance, a bank that has changed its business to focus more on commercial lending will have different demands than it did as a retail-focused institution. Some banks simply outgrow (or have plans to outgrow) their core platforms. Growing institutions need more flexible, advanced technology that can adjust with them to meet customers’ expectations for speed, convenience and personal service without skipping a beat. Other challenges with a core’s technology include the need for multichannel integration capabilities and an open infrastructure that allows bankers to work with the best-of-breed solutions of their choosing.

Broken relationships with core vendors also require a change. Core providers and banks must operate as trusted partners – working together to provide strategic counsel, power third-party partnerships and bring business plans into fruition. When one member of the partnership is not working harmoniously with the other, it creates a gap that ultimately interrupts the delivery and effectiveness of features and functionality powered by the core.

Strategic Comradery

When banks do enter into a new partnership with a core vendor, their strategic comradery is a critical component of ensuring a smooth transition between core platforms. Both bank and core provider need to be as prepared as possible for the testing, project management and ultimately the conversion. Project management might include integrating up to 30 or 40 different third-party products, each of which must be managed carefully by the bank. Do not assume that the third-party vendors will take your core integration as their own responsibility.

Another common mistake is underestimating the change curve for employees and customers. Replacing the core impacts everyone – employees and customers alike. It interrupts their habits and forces them to learn a new process. Both need to be reminded that the conversion brings significant gains.

For employees, successful conversions often include a top-down driven celebration to recognize the next step in the bank’s evolution. It helps to direct people to the end vision and make them feel like a part of the process. Keep your employees abreast of new functionality and capabilities – how the new core will actually make their jobs easier and provide more robust functionality for them to serve customers.

Customer communications must be thorough during a conversion, so invite customers to celebrate in the process with you. Inform them about the new features they can expect to see from your bank in the future, how you are making banking easier and more comprehensive to meet all of their financial needs.

Also, be prepared to quickly and smoothly address customer concerns. Despite proactive efforts, some customers will undoubtedly be caught off guard by the change and want to talk to someone. It’s paramount that customers have direct access during these times, so it can be wise to strengthen and inform call centers. Many banks choose to outsource overflow calls to a third-party call center, which can also be provided by your core vendor.

Once live, the secret to maintaining a successful conversion is to focus on the new system and let go of the old. Allow the new core platform to improve your organization. Encourage employees to develop new, more efficient and easier processes, rather than fall back into their old ways of doing things.

The core is the nucleus of an anytime, anywhere, constantly changing infrastructure. It’s designed for today’s realities and tomorrow’s possibilities. Anything less is not worth building your future upon.

Mr. Zengel is president of Monett, Mo.-based Jack Henry Banking. He can be reached at [email protected].