How to Select the Right Core Processor

Your core processor is not just a piece of technology, but the very heart of your financial institution’s data management and function. Its efficacy directly impacts the quality of service your account holders receive, the efficiency of your operations, and your ability to comply with regulations. In a recent study, it was found that 64% of financial institutions admit that their slow digital transformation directly impacted their ability to win over new account holders in 2023.

This underscores the criticality of choosing the right core processor, as it is not just a choice but a strategic decision that empowers you to lay the foundation for a successful digital transformation journey. The consequences of not choosing the right core processor can be detrimental to your institution’s growth and competitiveness.

Define Your Digital Transformation Goals

Before choosing a core processor, defining your digital transformation goals is crucial. These goals should encompass various aspects of operations, service delivery, and growth, representing a more efficient and customer-centric future and serving as a compass in the selection process.

• Enhancing Account Holder Experience: Your account holders expect seamless, fast, and convenient services. When asked, 70% say a consistent experience across all digital channels is extremely or very important to them. Therefore, one of the primary goals of digital transformation is to streamline service delivery, enabling account holders to conduct transactions swiftly and effortlessly, thereby enhancing their overall experience with your institution.
•  Digital Transformation: When harnessed effectively, digital transformation can revolutionize your financial institution’s operations. By automating routine tasks through technologies like artificial intelligence and machine learning, you can significantly enhance speed, accuracy, and efficiency. This frees up valuable resources and paves the way for a more streamlined and agile operation.
• Bolstering Data Analytics Capabilities: With the surge in data volume, variety, and velocity, financial institutions must upgrade their data analytics capabilities. Advanced data analytics can provide actionable insights, facilitate strategic decision-making, and help proactively identify opportunities and threats.
• Ensuring Security and Compliance: Security threats and regulatory requirements pose significant challenges. However, digital transformation can bolster cybersecurity measures and ensure compliance with the evolving regulatory landscape, instilling a sense of confidence in the security and compliance of your operations.
• Driving Business Growth: Digital transformation is about adapting to the present and shaping the future. By harnessing digital technologies, your financial institution can expand its account holder base, launch innovative products, and revolutionize how you do business, improving your market competitiveness and setting new industry standards.

Look Beyond the Cost of the Core

While cost is undeniably a critical consideration, focusing solely on it often means that other crucial aspects of a core processor are overlooked. Scalability, integration capabilities, user-friendliness, and vendor support are pivotal aspects that demand careful evaluation.

• Scalability: It is vital to ensure that your core can grow parallel to your financial institution’s future expansion. A scalable system can handle increasing transactions and accommodate growth in the account holder base without compromising speed or efficiency.
• Integration: The core processor should seamlessly integrate with existing systems and third-party applications, reducing operational silos while enhancing data flow, helping you to improve decision-making and account holder service.
• UX (User Experience): An intuitive interface with straightforward functionality ensures your employees can easily navigate and utilize it to their fullest potential. This user-friendly nature can significantly boost operational efficiency.
• Vendor Support: Robust vendor support is essential for smooth implementation and ongoing maintenance of the core processor. It guarantees timely troubleshooting and regular system updates, helping your financial institution maintain optimal performance and stay abreast of technological advancements.

Migration and Implementation

Choosing the core processor is just the first step. Migrating to the new system entails meticulous planning, coordination, and execution to minimize disruption. Implementation should be treated as an ongoing process, with regular assessments and adjustments to ensure the system optimally serves the financial institution’s needs.

• Project Scope: The first step is to outline the steps necessary for migration and identify potential hurdles. The plan should include a timeline for completion to manage expectations and ensure progress is trackable.
• Project Management: A dedicated project manager (PM) with experience in similar implementations should lead the project. The PM’s role is to oversee all aspects of the implementation, from coordinating resources and managing vendor relationships to resolving any issues that arise during the transition period.
• Team Preparation: A comprehensive approach to staff training before implementation will help to ensure a smooth transition. Training on the new system and what to do when they have a problem will boost their confidence and help them acclimate to new processes.
• Risk Management: Clear communication between account holders and staff is imperative, as is contingency planning for potential challenges such as system downtime, data loss, or staff resistance. By anticipating these obstacles, the project team can develop strategies to mitigate risks and ensure the project stays on track.
• Analysis and Ongoing Evaluation: Regular checkpoints, key performance indicators, and project milestones help ensure the system functions as expected and meets your financial institution’s needs. Adjustments or tweaks can be made during these evaluations to further optimize system utility and efficiency. This iterative approach helps ensure the implementation is successful and achieves its intended goals.

Embracing Change

Digital transformation is not just about technology. It’s about embracing change at all levels of the organization and fostering a culture of continuous improvement.

Your core processor is the backbone of all future digital initiatives, enabling your financial institution to operate more efficiently, serve account holders better, and stay competitive in the digital age. By identifying your strategic goals, selecting the right vendor, looking beyond costs, and meticulously managing migration and implementation, your financial institution can unlock the full potential of your core processor. The journey may be complex, but the rewards of a successful digital transformation will lead to greater operational efficiencies, enhanced account holder service, and sustained competitiveness, making it well worth the effort.

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For more on this topic, check out our webinar, Evaluating Critical Technology Options and Upgrading Your Digital Capabilities

Contact your local representative to learn more about what we offer or how to receive a complimentary evaluation. 

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. Our services include account acquisition, overdraft compliance consulting, contract negotiation, and technology strategy and selection.  From growing market share and improving non-interest income to contract negotiations and technology strategy, our experts offer you and your account holders the best solutions. 

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