How to create a seamless core conversion
Photo by RYosha/iStock
Making the switch to a new core technology provider can be a daunting task, since many core relationships last years, if not decades. Faced with several transitional issues, here’s how these community banks gained support from their new providers to adapt to the change.
By Elizabeth Judd
Two years before changing core processors, Asian Bank began conducting weekly meetings to brainstorm attributes its dream core provider would possess. These theoretical discussions ranged widely not only in terms of products and services but also in terms of employee participation. The CEO, CFO, chief lender, chief compliance officer, operation lead, head tellers, branch managers and HR manager of the $330 million-asset community bank participated. In the end, nearly one-third of employees played an active role in even the most preliminary of talks.
“These discussions cemented in everyone’s mind a willingness and a need for a change,” says James Wang, president and CEO of Asian Bank, which is based in Philadelphia. “Everyone had buy-in and got to contribute.”
“A conversion is a lot of work. But having buy-in makes everything easier. It’s better for people to believe in the process and have a stake in the eventual outcome.”
—James Wang, Asian Bank
Gone are the days when a CEO or a gutsy board member chooses a new core processor and then unveils the upcoming change to staff. Having buy-in from employees is now considered vital to success, especially since core processor changes happen infrequently. Asian Bank, for instance, worked with their previous core provider for nearly 20 years before switching in March 2021.
The length of Asian Bank’s core relationship is hardly unique. About two-thirds of community banks have maintained a relationship with the same core processor for more than five years, and nearly 50% have kept the same vendor for more than 10 years, according to the 2020 ICBA Community Bank Core Processing Survey.
Quick Stat
16%
of community banks changed their core processing vendor in 2020
Source: 2020 ICBA Core Processor Survey
One reason core changes happen so infrequently is that they tend to be large and disruptive undertakings. “Changing out the core provider is one of the biggest technology projects that a bank can go through,” says Deborah Matthews Phillips, senior vice president of payments and technology policy for ICBA. She notes that a core conversion typically takes anywhere from 12 to 18 months of planning and implementation, making managing such a project “a critical activity.”
During a conversion, employees may understandably resent being asked to wear two hats as they simultaneously perform their regular jobs while also mastering a whole new technology system.
“A conversion is a lot of work,” says Wang. “But having buy-in makes everything easier. It’s better for people to believe in the process and have a stake in the eventual outcome.”
The strategic “why”
When Del Norte Bank in Del Norte, Colo., switched core processors three years ago, the thought of making such a momentous change without employee input never crossed Michael Hurst’s mind.
“There’s a lot of work to be done that the CEO really doesn’t do. There were lots of extra hours,” says Hurst, who is president of the $117 million‑asset community bank. “If you [as an employee] were not included in the decision process, it would feel horrible.”
Because the brunt of a core change falls on employees, it’s important to begin communicating as early as possible. “The bank has to communicate from day one why we’re changing,” says Charles Potts, executive vice president and chief innovation officer for ICBA. He notes that creating buy-in takes vision and focus, as well as “a strong ‘why.’”
Click to enlarge
Hurst is convinced that articulating the strategic reasons for changing core providers made his bank’s core conversion palatable to his employees.
“The pain point was very high,” says Hurst. “With [our old provider], we were on a legacy system, and they had bolted on new components. It was always very unwieldy,” he says, noting that the new one “provided an integrated, seamless software for the core.”
He also notes that the new core offered more advanced features at a lower price point—features Del Norte Bank’s customers were demanding.
Del Norte employees involved in the decision-making communicated these benefits to their front line teammates, who immediately grasped the advantages of the change, such as the ability to see card management information from the teller platform.
“Our strategic ‘why’ was very simple,” says Hurst. “We were going to be able to offer modern banking systems that we [had been] locked out of through pricing. … With the transition, we got more product that we could hand to our clients for less money overall. We got our cake and could eat it, too.”
“The data piece—taking data from point A to point B and making sure it still is the same—is the easiest piece … The hardest part is making sure we’ve all communicated and everyone is on the same page.”
—Sarah Fankhauser, Data Center Inc.
Hurst credits the smooth transition both to regular communication and to an innovative idea championed by an employee: hiring some exceptional high school students to staff the phones during the frenetic week of the conversion. With these temporary hires answering routine questions and helping customers change their passwords, bank employees were freed up to focus on learning the new system and resolving thornier issues.
Go-live—and beyond
“The data piece—taking data from point A to point B and making sure it still is the same—is the easiest piece for both DCI and the bank,” says Sarah Fankhauser, president and CEO of Data Center Inc. (DCI), based in Hutchinson, Kan. “The hardest part is making sure we’ve all communicated and everyone is on the same page.”
Fankhauser insists that the education her team provides be “uninterrupted as much as possible. If employees are in and out of education all day, they won’t have gained the information they need to run the system.”
So convinced is Fankhauser of the importance of education that a few weeks before a go-live date, she and her staff typically administer a simple quiz to make sure a bank’s employees have mastered and retained the lessons.
What’s more, many processors travel to their customers’ locations to assist before and after the go-live date.
Megan Copeland, director of marketing for IBT Apps in Cedar Park, Texas, emphasizes the importance of the core processor trainers working side by side with bank employees. “We’ve stayed on site over a month [at one of our current client banks],” she says. “Our people live there. They’re there on the go-live date.”
Copeland notes that some of the deepest learning comes during the frantic days of the conversion itself. “Most people are kinesthetic learners,” she says, meaning they absorb information best when they can try the system themselves. In combination with professional support when needed, this hands-on approach, she explains, also gives bank employees “someone on the hook” should problems arise later.
Asian Bank’s Wang says communication and education should last long after the new core is up and running. “The day you convert, you have the basics,” he says, “but as you use the system more, you’ll see other things you didn’t think to ask. The conversation doesn’t stop the day of the actual conversion. It continues for a while.”
Fankhauser agrees, noting that during the conversion, employees learn what it takes to do their daily jobs, but they rarely grasp all the capabilities a system has to offer. She notes that DCI’s videos and learning modules can answer some questions, but she also likes to review processes several weeks later so bankers “can start digging into all the things they didn’t know to ask on day one.”
Viewing education as a long-term process is critical. In the end, Fankhauser says, “Making sure everybody is informed and feels positive about the change is the biggest thing about a successful conversion.”
Elizabeth Judd is a writer in Maryland.
Comments are closed.