INNOVATOR: Worth Harris Carter, Jr.

FIRM: Carter Bank & Trust

LATEST INNOVATION: Real-time, Web-based core platform that positions the bank for rapid growth


Converting to a new core system is a risky enough proposition; now consider being the very first bank to adopt a new core from a vendor that's never offered one. But the greatest innovations often require a leap of faith, and that is exactly what Worth Harris Carter Jr., founder of Virginia-based Carter Bank & Trust, agreed to back in 2005 when he inked an agreement to co-develop a core solution with VSoft, a company known in the U.S. mostly for image solutions.

But the way Carter sees it, the real risk for his $3.4 billion institution would have been settling for one of the solutions already on the market. In 2005, Carter planned to combine his 10 banks into one; in preparation he began researching new core systems that would unify the banks and position for aggressive growth. He was not satisfied with what he found. After dozens of bank site visits he determined that the core systems available had browser front ends but ran on old hardware and software that limited flexibility and drove up costs.

Even so, Carter got close to signing with one of the established vendors. "One promised us the moon and we proceeded to negotiate with them," he says. But when the contracts came back they didn't include the specifics they'd agreed to orally. "They kept saying don't worry, we'll take care of that, but they wouldn't put it in writing."

So Carter walked away and went a completely different route, teaming up with VSoft, which at the time was installing an image capture system at the bank. "We were extremely satisfied and we started discussing the core system and one thing led to another and we decided to help develop and beta test it," he says. "They were looking to create a core product they could market, and we were looking for something better than I'd seen."

The partners have taken a go-slow approach to deployment, going live one section at a time over a four-year period, which has helped lower conversion risk. By running the old system in parallel with the new for several months they worked through the kinks. "We always played it safe," Carter says. They first converted the general ledger, then the CSR platform, followed by the time-card system, deposits and loans. The loans component went live in March, and since then VSoft has begun marketing the technology under the CoreSoft brand name to banks with assets of $2.5 billion and less.

Even in a crowded field-with the likes of Fiserv, FIS/Metavante and Jack Henry-CoreSoft's technology is differentiating, says Rajesh M R, an analyst at Celent. It's a browser-based system built from the ground up on Java technology that includes support for multiple delivery channels, real-time transactions, 24/7 availability, regulatory compliance standards, and reporting capabilities, such as functional, informational, design and deployment perspectives. It integrates with third-party software solutions while providing a 360-degree view of customer relationships in a secure environment.

So how did a Virginia-based community bank and VSoft, which ran the project out of India, collaborate over such a lengthy period? Both sides say the process went remarkably smoothly, though both had some learning to do. There were 20-25 people assigned to the project and team members from India would regularly visit the U.S. and stay for several weeks or months at a time. One person came with his family for a year and a half.

Puneet Malhotra, vp of business development at VSoft, says at the start of the project VSoft hired eight or nine new people to form part of the core development team. These people had a range of deployment and technology experience that helped keep the collaboration from getting off track. Still, even with a good working relationship there was plenty of back and forth. For instance, Malhotra says, Carter Bank wanted the screen for any loan to look essentially the same, whether a commercial loan, mortgage or institutional loan. "They looked at it from a user's perspective. They didn't care where [the information] started, but we do care. When you design software you need to make sure you understand that." In the end, it's one of the functions Carter is most pleased with.

Malhotra says the cost of implementing the CoreSoft platform is about one-third the cost of rival platforms. What's more, once in place the platform's flexibility creates more savings. Bank executives can easily customize their own reports and develop new loans and deposit products without paying the vendor to customize or alter the system-all of which costs money.

As for his part, Carter says the new platform is exactly what he needs to compete aggressively and grow his bank. The number of branches has swollen from 35 branches in 1996 to 124 today with another 25 set to open within the next year. And the bank will be rolling out online banking for the first time in the third quarter. "I feel I have the capability to do this now that I didn't have previously in terms of delivering products to customers," Carter says. "We didn't have a foundation big enough to build a bigger house. Now we do."

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