While a core search and discovery process can be time consuming, and often overwhelming, there are strategies credit union executives can employ to help make the process less cumbersome and stressful.
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Now, CU Journal takes a close look at three institutions -- Denver Fire Department Federal Credit Union, Red Rocks Credit Union and Warren Federal Credit Union, that recently underwent a core search and conversion.
One important lesson is that in some cases, what appears to be the right vendor choice can change following a discovery process with a trusted consultant.
All three CUs have one thing in common, each worked with the Denver consulting firm DaLand Solutions. Over the last five years, the firm has worked with over 70 credit unions on a number of technology-based projects.
"We are not unique in terms of the types of the services we offer; obviously there are other folks out there who consult credit union clients on vendor selection," said DaLand Solutions Owning Partner Jon Ungerland. "Everyone in our firm has worked in the credit union industry at either an executive level or an operational management level or in a technology position.
Core Conversion Search Is On
The $596 million Cheyenne, Wyo.-based CU, which supports 170, employees, 54,771 members and eight branches, began its new core search when its existing core contract had two years left.
"Our prior core platform was very tried and true, but the areas where we seemed to constantly run into roadblocks revolved around the ease-of-use from an end-user perspective, ability to integrate with new vendor partners and ease with which to access the data of the core platform," said Warren FCU Senior Vice President of IT Andrew Shaw. "These are the hurdles that many older systems have to try to overcome, but re-writing an entire platform is a very tall order."
Experts recommend starting the core search process when the existing vendor's contract has about 18 to 24 months left to run.
"There are two ways to approach a core selection," said Ungerland. "You can assume that all of the bigger vendors have some magic recipe or formula that can't be replicated. Or you can look at market dynamics going on around technology and innovation that are making it easier and more cost effective and more viable for companies to compete with these bigger vendor products."
And when considering a core vendor, there is a plethora of white papers to review (Gartner, Callahan & Associates and the like). Additionally, there are firms that rank vendors on a series of issues as well as industry trends all of which Ungerland said can be beneficial when starting an executive dialogue.
"When it comes to making a decision, you need a different kind of data that is normalized. So you can go out to the market and collect information from each vendor that is placed into a consistent framework that can be analyzed in a way in which you can draw out relevant points of analysis," said Ungerland
To ensure that the best pairing of credit union and vendor is reached during the request for proposal process, DaLand Solutions plays on both sides of the industry fence.
"We don't inform opinions of vendors in a bubble. We collect data from them as a starting point for dialogue. Some consulting firms only survey the credit union, so they only get half of the story," said Ungerland. "I can oversite this, we believe vendors are the experts with unique offerings that suit certain types of clients. Even the vendors that work with us and don't win the deal, they realize the terms of the conversation for all parties was at a level playing field."
The Debate Goes On
Before the $250 million Red Rocks CU connected with DaLand, its executive team took six months to debate the benefits and feasibility of undertaking a robust core discovery. Vice President of Development, Jason Nelson said that initially the team determined its "incumbent platform" provided satisfactory architecture with modernized code.
"We sought a partnership with DaLand Solutions to enable enhanced business intelligence platforms off of the Fiserv platform. We felt it in our best interests to test DaLand's capabilities through a condensed version of their core discovery search," said Nelson.
Denver Fire Department FCU started the core search process with a tighter timeframe, around 15 months before its contract expired. The $145 million institution with one branch, 10 employees and 5,700 members, first assigned two employees to lead the search committee, including President and CEO Mark Lau.
"We were on an old legacy core system that was not keeping up with technology," said Lau. "It was also an in-house solution, and we were looking to convert to a service bureau."
Lau had worked DaLand on a different consulting project, and then brought Ungerland and his team in shortly after starting the core search.
"We wanted to find a partner that was able to take our decision for a new core system and apply metrics to the process," said Lau. "This would enable us quantify the decision with a solid scoring system, and eliminate as much emotional bias as possible."
During Red Rocks core-discovery phase, Nelson explained a team of internal experts representing every business and transactional segment from the CU was formed to ensure the best system for its 45 employees and 17,700 members was selected. Ungerland added that this type of approach is critical to defining the unique needs of a credit union.
Changing Core Competition
While Nelson righty noted that there are numerous core vendors jostling for market share, there are just a handful of firms that hold the lion's share. But that could be changing.
"The big players like Fiserv and Jack Henry offer great products and we have clients that have chosen these vendors, but the climate around running a core technology now is different than it was 15 year ago," said Ungerland. "Core [providers] were in their heyday 20 years ago and were coming into full stride, but that required massive data centers, big SAN networks and big physical hardware clusters to support multiple credit unions. Then came along more efficient networking tools, cloud and storage solutions that make it more cost-effective and flexible to build and support competing products."
Understanding changing technologies and resulting vendor service offerings is an ongoing educational process for all credit unions, including Warren FCU. And while many new lessons were learned, Shaw noted there is no core silver bullet.
"I would advise that anyone looking to go through a core search really have down a formal listing of items that they are looking for in their new core system, or lacking in their existing one," said Shaw. "This will truly help in the evaluation process and make the decision that is in the best interest of your credit union. There is no perfect system, otherwise everyone would have it."
Three CUs, Three Different Decisions
All three credit union said that before working with DaLand, internal search teams were leaning in a different direction than the core vendor ultimately selected. And each CU selected a different core provider.
"With little over a month to go until our contract with Fiserv expired, we secured a unanimous decision from our management team to convert to CU Prodigy," said Nelson. "And we never looked back."
For Denver Fire Department, the entire core search process took three months. "We selected Fiserv Portico, which was the system that most accurately reflected our needs and benefits as outlined in DaLand's core search modeling," said Lau. "Over my career I have been through a half dozen core conversions, and this was by far the best. We had a few conversion issues with cards and our internet banking, but frankly I have experienced more serious problems in past core conversions."
Warren FCU's Shaw explained that his CU selected Corelation's Keystone platform. The main drivers behind this decision, he noted, were the modernized interface as well as a "highly adaptable API" that is open to the entire database complete with full-featured reporting software that is built into the core. A little more than one year transpired from the signing of the contract to the "go-live" date, and he shared a few valuable lessons learned along the way.
"The conversion process was a first for the majority of the staff. Some lessons that we learned in the process were knowing our limitations during the process and not try to do everything. The thought process at the time that we went through the conversion was to fix almost everything that we did not like in our prior system," said Shaw. "In hindsight, we might have evaluated and ranked these initiatives more effectively to do some projects very well instead of a lot of things just okay."
