IS YOUR CREDIT UNION READY FOR A CORE CONVERSION?
The credit union industry is changing. In the past decade, mergers have created larger entities to rival traditional banks. Signature personalized services combined with more locations and a wider array of product options are making credit unions more accessible than ever. It stands to reason that technological adjustments are necessary to meet the demands of members and revenue growth, and a system upgrade may be the solution. Keep reading to help decide if your credit union is ready to consider a core conversion and be prepared for credit union core conversion time!
The Core Concern
As you most likely already know, a credit union core processing system is the platform software responsible for main credit union functions. Teller transactions, account management, deposits, debits, loan payment activity, online banking, customer data management, and other front-line and back-end operations are dependent upon the same central source. You might say the core is the “brain” of the business. These days, there is an urgency for real-time financial access. Mainstream usage of digital banking has skyrocketed, and security threats are keeping pace.
The software needed to support these processes can slow down over time, with increased online consumerism and mounting requirements for better technology. Strains on the system can cause malfunctions resulting in delays, and worse… crashes causing loss of vital data. Before it gets to that point, management has ideally planned for growth and contingency, up to and including a core upgrade.
Evaluate the Current System
Common indicators of an imminent core replacement can be obvious when performing an analysis of what already exists. In evaluating your existing system, you must ask yourself first and foremost if the current core is growing along with the credit union’s vision for success. In this case, you would be looking at introducing a system that brings in new capabilities – not one that in essence mirrors the old system. In a 2018 CreditUnions.com article, Rick Long, VP of IT Services at Pennsylvania State Employees Credit Union, mentions that “A core conversion is about creating the future, not replicating the past.” Think about how your particular credit union environment will adapt to current and upcoming trends, and keep an open mind.
Make a list of the improvements you wish to see, and another list of obstacles your credit union is facing. Is existing software still working as intended, with no lags or fluctuations? Is data processing retaining cost efficiency? What kind of power will be needed as growth progresses? Will new technology disrupt the mechanisms already in place? Is updated software having compatibility issues? Is compliance being compromised? Also, check to see if a core provider, data processor, or forms provider contract is coming up for renewal. This is the best time to make changes, and perhaps upgrade vendors along with the software and hardware. At any rate, you should find out how to seamlessly transfer contracts, including when and how to terminate billing if you aren’t staying with the current provider.
Shop Around
Due diligence is in order to find the right provider and processor for your credit union. Ask credit union peers about their systems and do apple-to-apple comparisons. Ask about any positive or detrimental results they’ve experienced as a result of a changeover. Get referrals. Set a budget. Focus on the outcome of operational expenses, loan origination, speed, efficiency, and ease of use. You’ll decide whether your system should be run in-house or remotely. Interview several potential partners and get a few proposals before deciding who will be the best fit for your institution. Determine if the provider is experienced with credit unions of comparable size. To save time in this area, there are consultants and brokers who can work with you to create a short list of business vendors matching your conversion’s vision and goals.
Your team of decision-makers will likely have different opinions, and you will want to find the provider who can most closely meet all of the stakeholders’ needs. Schedule demos, and give consideration to all areas involved when testing out a possible new core solution. Is it user-friendly? Is it maximizing the potential for growth? What is the processing time for loan origination? Does it streamline two or more applications? Does it integrate third-party solutions? You’ll want to prepare an extensive list of questions representing each area of operations during the evaluation.
If you are happy with your current core provider, ask for advice and see what different upgrade options they can offer. It’s best to compare other vendors against your current provider to see what new trends and technologies might be available, and who can offer the best-customized service for your particular set of circumstances.
The Planning Stages
Once you’ve chosen a core provider, you will want to establish a timeline and create a planning schedule with your team. Your conversion task force should be a mixture of staff and board members who are knowledgeable in each area the upgrade involves. Set a launch date. Establish project management roles. You will be strategizing each function’s implementation into the new system, and preparing for contingencies. Organization and communication are essential to ensuring the success of your launch. You may want to develop a checklist that everyone contributes to, as a means of accountability. Set aside plenty of time for testing and getting staff up to speed on the new processes before the rollout.
Keep your members informed of the conversion schedule and what the desired outcome is expected to be. Let them know how to prepare for any interruptions that may occur. Update them throughout the process, and have an easy way to check in with questions or concerns. Maybe a “hotline” with dedicated staff can be appointed for this purpose. Prepare for vulnerabilities by the printing or transferring sensitive, irreplaceable data to another system before converting over. Let members know they should print out some of their records at home or save the information digitally. Utilize newsletters and FAQ sections on the credit union website to let members know well in advance that the conversion is being planned, and that more information will be distributed as it becomes available. Make sure the information stays as updated as possible. Print hard copies of notices to be mailed to members’ addresses and posted in credit union lobbies in the event that website access is unavailable during probable downtimes. Also, let your members know what will not change during the process. Assure them that their bank card purchases won’t be interrupted, and direct deposits will still go through (if applicable).
Prepare staff and members that the website and other elements of their banking experience may have a new look and feel. It’s not uncommon for credit unions to take the opportunity to rebrand or change their logo and/or name during a core conversion.
Most importantly, remind members that the eventual goal is to make their experience with your credit union a smoother and more efficient experience. You will be able to offer products and services with improved technology, accommodating more options and flexibility for enhanced personalized service.
Minimize Disruption
Depending on your credit union’s size, the conversion could take months to complete, at least on the back end. Componentizing is a route some larger financial institutions take in order to break the process down into digestible components. With this approach, the software is converted one segment at a time rather than all at once. You could also consider alternative methods of technology that can be used as a backup if systems are down longer than expected. If all goes well, your members may never be inconvenienced or even notice when the transitions have occurred.
Training and Oversight
Dedicate operational staff from each department, including senior management, to focus on any and all areas of conversion. Have strategies and point persons for troubleshooting and quality control. Schedule multiple training sessions to ensure knowledge and confidence in handling any new equipment or software before going live. Test – and test again.
Be Flexible
Expect the unexpected, but have contingency plans in place to combat any real threats to a smooth conversion. Have additional staff and resources available for unplanned setbacks.
Enjoy Your New System
Be happy with the choices you’ve made, and the changes your credit union will experience. It symbolizes growth and perseverance in an ever-changing financial world. You will have overcome some pretty exhausting challenges, so rest easy knowing you won’t need to go through it again for a long while.
Now that you’ve become more familiar with the process of conversion and the steps leading up to it, do you think your credit union is ready to take this leap? Contact us today to improve your credit union lending or membership forms, or you can request a free sample of our credit union documents. Remember, our forms work with almost every core on the market!
