Break Free from Legacy Systems and Upgrade Your Core
Categories:
Six ways an expert negotiator can impact results
Believe it or not, many FIs use core software purchased 20 to 30 years ago. To keep up with evolving technology and business growth, many financial institutions have turned to adding ancillary products like chat, loan software, and online account opening tools. However, this often leads to a complex IT environment, making it challenging to manage, launch new products, and stay compliant with regulations.
Whether your current core is being sunset, or it just can’t support your growth goals, making a change is often the best move for gaining efficiencies and improving service delivery.
According to industry reports, FIs cite several reasons they will NOT change core processors. These included: limited staff resources, fear that account holders will be inconvenienced during the switch, and cost.
Overcome barriers to changing your core processor
While our clients have experienced these concerns, the underlying reason is because they do not have enough time to evaluate all of the options and make a thorough comparison.
A new core processor is a significant undertaking, however, postponing the upgrade only exacerbates the problem if your system is outdated and not well integrated with the other tech at your FI.
It’s time to overcome the hesitation, create a plan, and address the issue head-on so you can begin enjoying the advantages of a modern core processor and remain competitive.
Full team commitment — plus extra support
A core processor conversion is a complex and lengthy process, ideally beginning two years before your current core processor contract expires. Since time is a finite resource, bringing in an experienced expert to lead the core search and conversion process can be highly beneficial. This expert can help navigate the complexities of keeping the project on track, ensuring a successful transition on time and within budget.
During the conversion, you will likely not take on any other large initiatives. You may also find that you may need more support as the project progresses. Consider hiring temporary staff to avoid overburdening your existing staff and to ensure a smooth transition for your account holders. Temporary staff can provide valuable assistance and may become potential long-term team members.
Specialized expertise offers bigger value
Leveraging outside expertise from ADVANTAGE streamlines the process to secure the best value for you. Our knowledge of the vendors and over 16 years of industry experience gives us the upper hand when evaluating contracts and negotiating the best terms. We know what benefits and features to request, and what other institutions pay for similar services. Plus, we can help addressing your needs for future growth.
In a lengthy process like core conversions, you get even more from our team’s proven process:
- Discovery. First, we learn from you about your current environment, spending time with departments to identify strengths, weaknesses, goals, and objectives. Once aligned, we will work with you to align with vendors that best fit your needs.
- RFPs. Next, we write and distribute requests for proposal (RFPs) to the agreed-upon trusted vendors.
- Selection and evaluation. We evaluate the RFP responses and help your team narrow options by clarifying, guiding, and advising.
- Coordination. We schedule all meetings between your staff, our team, and vendors, including demos and presentations.
- Negotiations. We negotiate with each vendor, using our industry and market knowledge to ensure you receive the best rates.
- Final negotiations. When you have chosen a vendor to proceed with, we complete the “best and final offer” negotiations, contract order, and contract review. After you sign the contract, we transition you to the vendor’s implementation team.
Having support along the way can prevent your staff from getting weighed down by the administrative details of the search process. Plus, when it comes time to negotiate, you get the best deal and most favorable terms.
A core conversion success story
Our team recently helped a client complete a core processor conversion. The client had already narrowed their options to two vendors in this case. We evaluated each vendor’s proposal and negotiated the final offers for them to choose from.
Here is their story:
Our client had been on the core for over 20 years. It was the first — and only — core processing system they had ever used. They had no idea how outdated the system was until we showed them what else was available. Plus, the vendor had not released any enhancements in quite some time, and they weren’t fixing anything, either — just patching or offering a workaround. It seemed to them that the vendor was phasing the system out.
Over the past ten years, the client had successfully increased loan volume, but their evolving needs have made the current system feel less aligned with their goals. Despite this, their vendor’s account rep continued to push the same core, missing an opportunity to explore options that might have better served their growth and strengthened the client relationship.
By seeking expert advice on evaluating options, our client was able to switch without significantly increasing their costs. The new system aligns better with their growth strategy and technology advancement plans.
After implementing the new core processor, our client:
- Improved their operating efficiency
- Delivered a better online and mobile banking experience to account holders
- Offered a better solution for commercial loan repayment structures
- Provided more deposit products and services like sweep accounts and rewards checking
Start thinking ahead
The core conversion process can take some time, but the efficiencies, value, and growth potential you’ll see afterward will make the effort worthwhile.
If you’re not satisfied with your current core processor, check your contract today to see when it’s set to expire. Mark your calendar for when it’s 24 months from the expiration date—and make a plan to tackle this project head-on.
For more on this topic, check out our webinar: Evaluating Critical Technology Options and Upgrading Your Digital Capabilities
Read more from our blog:
- How to choose your core processor
- Technology Trends that are Attracting New Account Holders
- Do your digital offerings meet consumer needs?
Or contact us to speak to an expert
About ADVANTAGE, powered by JMFA
ADVANTAGE is a leading provider of consultation services for credit unions and community banks. With a long-standing 40-year history of excellence, we help our clients navigate the ever-changing financial landscape, providing solutions that give them a competitive advantage.
We help community financial institutions grow non-interest income with account acquisition and deposit growth and overdraft privilege, and save time and money with vendor contract negotiation, and technology strategy and selection.
To subscribe to our news and updates, visit advantage-fi.com/newsletter.
