Opportunity costs drive credit unions to forge ahead with core conversions despite disruption.
Some credit unions stopped or delayed core system conversions because of the pandemic, for obvious reasons. But the two credit unions featured in this article are among many who chose to forge ahead despite the headwinds caused by COVID-19.
The answer for both credit unions boils down to a basic business concept: opportunity costs. In other words, the cost for these organizations not to convert their core systems when they did outweighed the advantages of waiting for conditions to return to “normal”—whenever and whatever that may be.
CIO Kevin Thomas of $1.3 billion SAFE Federal Credit Union, Sumter, South Carolina, says the CU’s previous core system had originally been installed in 1989—the IT equivalent of the Bronze Age. It had been steadily adapted over the years to meet evolving needs, but Thomas says it had simply reached its limit.
“We needed a core that was programmed in a language that’s robust enough to adapt to what employees need to do their jobs efficiently and to provide the types of services members are expecting now,” Thomas says.
Completing the remote core conversion during a national health crisis was difficult, and the credit union is still working through completing upgrades made possible by the new core system. But overall, the decision to move ahead with the conversion has been a huge success, says Wayne Keels, director of continuous improvement for SAFE FCU, who oversaw the conversion.
“We replaced hundreds of hours of manual procedures with automated processes,” Keels says. The improvements range from as simple as getting reports with a click instead of submitting a help desk ticket to as complex as a new customer relationship management tool that integrates seamlessly with the CU’s new Symitar core system, Episys.
Gaining CRM capabilities was also a key reason $599 million UMassFive College Federal Credit Union, Hadley, Massachusetts, saw an urgent need to keep its core system conversion on schedule in 2020, says EVP/COO Lauren Duffy.
The credit union’s previous core system, Fiserv’s Portico, is calibrated for credit unions considerably smaller than $599 million. The CU had updated Portico as far as it would go, and Duffy knew that converting to Fiserv’s DNA core system would significantly upgrade services for members and improve overall back-office efficiency.
An upgrade Duffy especially desired is that DNA assigns different products to a single account for each member, rather than assigning a separate membership for each product or service. In other words, someone who wanted two checking accounts previously was assigned two separate memberships. This made many aspects of member service, marketing and data analysis difficult or impossible.
“Now, you can see every relationship you have with the credit union with one login. It matches the way we live and bank now,” says Duffy.
She points to one simple but very popular program that UMassFive College FCU offers members as a good example of how the new core system has changed the credit union’s workflow. It’s called “Co-op Points,” which members earn for many types of transactions. They can turn in their Co-op Points for benefits like waiving fees, lowering loan rates, etc.
Duffy says the program used to require multiple manual procedures for every transaction. Now, DNA runs the whole thing in the background. It may seem like a small thing, says Duffy, “but for the people who work on the front lines of this organization, that custom development is a huge efficiency gain.”cues icon
Glenn Harrison writes for Credit Union Management from Stoughton, Wisconsin.