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When It’s Time For A Change

Core conversions aren’t cheap or easy, but sometimes they're necessary. Here's how to make the decision in a way that will serve your credit union for years to come.
Ted Bilke

In terms of technology projects, a data processing conversion is undeniably the most ambitious and far-reaching endeavor that a credit union can undertake. It requires more resources than any other technology project and has a significant impact on every single credit union employee and the entire member base.

The first question your credit union needs to answer is whether the time has truly come for a new data processing system. We find these decisions are typically driven by a combination of two primary factors: a current technology platform that is impeding the growth or development of the credit union, and a degradation in service levels the current provider offers.

Here are 10 signs that your credit union may be ready for a new data processing system:

  1. Front-line employees are dissatisfied with the current system.
  2. Back-office employees find it difficult or impossible to meet the needs of the organization.
  3. Third-party products are difficult or impossible to integrate, or your core provider charges you an excessive amount for that integration.
  4. Support staff at the core provider has been cut back.
  5. The core provider has promised a rewrite or major update, but has failed to either deliver the specified product or deliver the specified product within the promised time frame or both.
  6. Your credit union is unable to deliver the products and services your members want and need because of your technology platform’s limitations.
  7. Ownership of your core provider frequently changes hands.
  8. Your credit union experiences significant downtime, which is exacerbated by unresponsive customer service from your core provider.
  9. Your current core provider loses sight of the partnership nature of the relationship.
  10. Technology mishaps result in negative publicity for your credit union.

Be Sure

The signs of poor customer service on the part of your core provider are usually obvious and irrefutable. However, if your issues lie largely in the functionality of your core platform, you’re well-advised to step back and take a second look at the situation. Talk with your core provider about your concerns. What you may find is that the functionality you feel you so desperately need has been there all along.

At Symitar, we devote considerable effort both at our annual educational conference and all year long to help ensure that our clients are familiar with all the functionality that’s at their fingertips. Even so, it’s not unusual for a client to tell me, I wish Episys could do such-and-such, and for my answer to be, Well, that was included in one of our biannual releases three or four years ago.

We’re fortunate to be in an industry where information is shared so freely, so take advantage of it.

I can’t really fault the credit union for this. The longer you’ve been on a system, the more likely it is that you get set in your ways and overlook a system enhancement that may be very beneficial to your organization. Plus, you may not necessarily need an enhancement right when it’s released. For example, we might offer an enhancement in 2011 that your credit union doesn’t actually develop a need for until 2013. It’s very easy to lose sight of what was included in a release two years ago. A credit union that converted to Symitar 10 years ago is looking at more than 20 releases (two per year) with an average of 35-40 projects in each release; that’s several hundred projects.

The bottom line here is that you should exercise all due diligence in ensuring that your current platform really can’t meet your needs.

DIY Vs. Consultants

Once you’ve determined that your current system needs to be replaced, it’s time to start shopping. The first question you need to answer at this point is: Will your credit union undertake the core search on its own, or will it enlist the services of a consultancy?

I’ve talked with some credit unions that would never consider using a consultant, and I’ve talked with others who wouldn’t dream of not using a consultant for such a major undertaking. Both approaches have their benefits. Which option you choose depends largely on the sophistication of your staff.

One advantage of going it alone is that you can get right down to business now. You don’t have to invest any time at all transferring knowledge of your operation to a third party. If you have a very clear vision of what your needs are today, and an equally clear vision of what your needs will be in one, three, five years or further down the road, you may want to consider this option. And of course, this approach will save you the consultant fees.

On the other hand, there’s something to be said for the experience a consultant brings to the table. Chances are you haven’t undertaken a core search in quite some time and hopefully your next one won’t be for decades. Consultants, however, are in the business of conducting core searches. They know the ins and outs, the traps and pitfalls, and they can keep the process running as smoothly and efficiently as possible. Based on their experience with other credit unions, they may also identify future needs that perhaps you haven’t thought of.

It’s like reading Yelp reviews of a seemingly amazing restaurant. No matter how many five-star reviews it gets, there’s still going to be handful of three-star or even one-star reviews.

Just as in any other profession, quality in core search consulting runs the gamut. It may sound like a clich, but you really do get what you pay for. Your best bet is to talk to your peers that have recently conducted core searches. Learn from their experiences and recommendations. We’re fortunate to be in an industry where information is shared so freely, so take advantage of it.

Which brings me to my next point.

Peer Input

Word-of-mouth is still the best advertising. How many times have you heard that statement in your life? This seems to be an ageless truth. No matter how much money a company invests in Google AdWords, no matter how many emails it sends, no matter how many white papers it publishes, and no matter how sophisticated it gets with Web analytics, nothing will ever beat an unbiased peer referral.

You need to be careful, though. Every company I mean every company has at least a handful of happy customers. Or put another way, every company has a short list of its best references. This is the list that any prospective core provider will hand you when it comes time to make reference calls.

I’ve watched enough courtroom dramas to know that you don’t ask a question unless you already know the answer. Along those same lines, no vendor is going to include a credit union on its reference list unless that vendor already has a pretty good idea what that credit union is going to say.

My advice to you: Don’t settle for any vendor’s reference list. Insist on a copy of its full customer list. And then start calling those customers at random. This is the only way you’re going to get a clear, honest, unbiased picture of what it’s like to run a particular platform and work with a particular vendor.

Let me be clear about this, though. No vendor in any sector can claim 100% satisfaction by 100% of its customer base. It’s just not possible. It’s like reading Yelp reviews of a seemingly amazing restaurant. No matter how many five-star reviews it gets, there’s still going to be handful of three-star or even one-star reviews. The key is to consider them all in aggregate and draw your own conclusions accordingly.

Core conversions aren’t cheap. And core conversions aren’t easy. But sometimes, core conversions are necessary. Employ the proper amount of due diligence and you’re sure to make a decision that will serve your credit union for many years to come.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
December 1, 2014

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