Every five years, Hawaii National Bank reviews the market for the latest in core banking solutions. And for 14 years, the Honolulu bank stayed with its in-house core, Premier from Fiserv.

But by the winter of 2011, market conditions had made outsourcing a viable option for the business lender. Hawaii National wanted to reduce spending on hardware and software, but it also wanted to trim its portfolio of leased properties by consolidating a stand-alone operations center into the bank's headquarters or another branch.

So it held a bake-off, first by identifying 17 core vendors and 34 solutions, which the bank culled down to six providers and seven core systems that had to meet three criteria: The vendors had to offer an outsourced solution; have at least 100 banks as customers; and target commercial institutions with between $300 million and $1 billion of assets.

The candidates included: Data Center's iCore360; Fidelity National Information Services' Integrated Banking Solution; Fiserv's Precision and Premier platforms; Harland Financial Solutions' PhoenixEFE; Jack Henry' Silverlake; and Open Solutions' DNA. Out of three finalists, Hawaii National in April chose Harland's PhoenixEFE, a platform that combines core processing with other specialized banking applications. "The bank has preferred 'best of suite' rather than 'best of breed' solutions to reduce operational complexity, simplify vendor management and manage costs," says Bryan Luke, executive vice president at Hawaii National. "But service, integration, culture and who they're really targeted at: These were factors for us."

In addition to the PhoenixEFE core, which will be run from a Harland facility in Cincinnati, Hawaii National has purchased Harland's Cavion suite, which includes Internet, business, mobile and voice banking. The bank has also tapped Harland's CreditQuest for commercial loan risk management; Harland's Touche Analyzer for business intelligence; and Harland's ActiveView for content management, item processing, merchant capture and electronic funds transfer. The bank already uses Harland's LaserPro for loan documentation.

Hawaii National will retain Fiserv's financial application software IPS-Sendero, which covers general ledger, budgeting, customer, organizational and product profitability; as well as Vantiv, for automated teller machine, point of sale and debit card processing. "The bank has chosen to use other vendor solutions only when the primary vendor's offering was unable to meet business needs," Luke says.

Improved pricing for outsourcing and the smaller size of modern hardware have afforded Hawaii National flexibility previously out of reach. "The cost of outsourcing, which was a lot higher five, seven years ago when we first looked at it, has significantly gone down," Luke says. "Our data rooms and our servers don't require as much space. And with outsourcing we'll need even less."

The plan is for Hawaii National to exit the leased building that houses the bank's stand-alone data center, and bring that operations center into an existing branch. "The necessary space for a full data center we had in our ops center really has shrunk," Luke says. "In Hawaii you're dealing with some of the highest real estate costs in the country, so that's a factor. We're still in the planning phase, but we're going to be doing it. Whether it goes into our headquarters or another location that we currently utilize, we can give up a whole building."

The bank is first implementing four Harland solutions peripheral to PhoenixEFE, including CreditQuest, before converting to the core. "We don't want to shock the system too much by doing everything all at once," Luke says.

Business lending is a big part of the bank's business. "The majority of our credits are commercial," Luke says. CreditQuest is an "end-to-end" commercial lending solution, which Luke expects to eliminate the rekeying of loan data currently required by multiple systems at the bank.

"Right now, we do a lot of things either with other systems or Microsoft Word and Excel, and then as it goes through the workflow, on occasion they have to be rekeyed into another system, and then another system after that," Luke says. "Basically what CreditQuest does is it incorporates the analysis, the underwriting, the onboarding and then the customer management, and you just input it once, versus putting it into a couple of different locations and into a couple of different systems. Our hope is that once we are converted to Phoenix, you do it once and then it flows through the whole system. So it reduces the need for re-entering it through various systems and/or trying to link them up through patches and whatnot."




BANK: Hawaii National Bank

PROBLEM: The bank needed to upgrade its core, yet cut IT costs and consolidate real estate properties.

SOLUTION: Outsource to a core processing provider.