MEMPHIS, Tenn.-Perhaps the biggest technology decision a credit union can make is undertaking a core conversion. While there are longstanding, brand-name providers in a market that has been seeing consolidation, new competition is emerging.
"When we began the process we had a list of about four systems we were interested in reviewing," said Orion Federal Credit Union's President and CEO, Daniel Weickenand. "Several of us making the decision have many years of experience in the industry with different operating systems and we wanted to go into this search with an open mind and leave our bias or past experiences at the door."
With 55,000 members, 130 employees, nine branches and $530 million in assets, Orion FCU entered a discovery phase that included demonstrations from numerous providers, a process that took nearly one year.
"We eliminated a couple of providers pretty quickly due to their responses to our follow-up questions after the demo," said Weickenand. "It was interesting actually to see how some of the established products had this 'Take it or leave it' attitude during this process, which we felt was an indicator of 'We are the only game in town and we know it,' or 'We are just too big and we do not move that way for you.' Now if we were Navy Federal, who knows?"
Orion FCU ended up selecting the San Diego-based Corelation, Inc. and its Keystone core processing technology. The industry newcomer, which serves clients with an asset range from $20 million to $650 million, currently has eight credit union clients with an additional four under contract.
'Robust Integration'
"Our technology is new and we are truly an open system. We provide a site license for our Application Programming Interface (API) with each sale," said Corelation's President, Theresa Benavidez. "The API we provide our clients and vendor partners is the same API we use for our user interface (UI) so that means all messages can be exposed to the third parties and our clients, translating to more robust integration."
While there is always trepidation when undertaking any core conversion, selecting a relatively new provider in an otherwise established industry could exacerbate fears in what is already a nerve-wracking process.
"We did not look at Corelation as a risk because John wrote other systems that are currently being used today in a significant amount of credit unions," said Weickenand, referring to John Landis, one of the creators of the original Symitar platform and founder of Corelation.
Checklist In Hand
"Corelation is also written in today's language where the others [providers] are at least 20 years old is something we also considered a significant strength," said Weickenand. "Let's face it, we are in the risk business and I do not see anyone surviving by playing it safe or following the leader. All institutions are different and need to find their own path to success."
Regardless of the provider selected, a credit union approaching a core conversion should have a checklist in hand, stressed Benavidez.
"A conversion takes a lot of work and a lot of planning. It's not working together for a couple of days then flipping a switch and everything works," said Benavidez. "If you think about it, it is much like the Super Bowl. It takes months of planning and everything has to come together on one day."
Orion FCU didn't conduct beta-testing; however, it did undergo three mock conversions in the months leading to the official launch.
"There was a lot of development for our credit union that was different than what they [Corelation] saw prior, like our decisioning and pricing model for loans and other things, but these were tested along the way," said Weickenand. "The mock conversions refined the process each time to where when we did go live the conversion process was painless as possible."
From a hardware perspective, the credit union refreshed all its PCs prior to the conversion and purchased two new IBM servers to house Corelation and backup data, explained Weickenand. "During the conversion process we also provided our employees with a significant amount of training from general to area specific. We had a couple of individuals from Corelation as well as our in-house trainer assisting and designing this process."
Seeing ROI
The launch has been successful with a tangible return on investment realized, according to Weickenand. Weickenand said the previous operating system was a "money pit" requiring more than 40 servers, many "moving parts" as well as core, accounting, lending and reporting software.
"We now have less than 20 servers. The time it took to produce a loan including funding was in the area of two to three hours under the last system that is cut down to minutes now," noted Weickenand. "Teller transactions were based upon transaction codes, which the learning curve on training was significant and now the system is as easy as point and click-if you can work a mouse, you can work on our teller line."
Shopping? Some Advice
When asked what advice she would give to credit unions looking to undertake a core conversion, Benavidez said a good first step is auditing existing and future vendors.
"Every core processing system provides support for share/loans and ancillary products. The rubber meets the road when you measure the responsiveness of your vendor when you need something from them," said Benavidez. "It must be a partnership and it must be two-way partnership."
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