Helpful Tips for Streamlining the Core Conversion Process

“When it comes to core conversions, some are bad—and the rest are even worse.” Chief administrative officer and senior marketing director Emily Mays heard this warning a few years ago as $200 million-asset Community Spirit Bank embarked on a core conversion. 

It became a motto of sorts at the Red Bay, Ala., community bank. 

“Most banks know this is going to be a beast, and so it was really valuable to go in with reasonable expectations,” Mays says.

For anyone starting or considering a core conversion, here are tips for making each of five critical stages smoother.

Step 1: Make the decision to convert

Neighbors Bank in Clarence, Mo., with $68 million in assets, underwent a core conversion in late May after five years with its previous processor. At Community Spirit, the prior core had been in place for 42 years before the bank converted to its new core in May 2022.

A range of timelines this broad is no anomaly in the community banking world. As of 2020, 34% of community banks had spent 20 or more years with their current cores, according to the ICBA Core Processor Resource Guide. 

That said, more banks than ever are operating on newer cores. The guide also notes that in 2020, 36% of banks had used their current core processor for five years or less, while only 13% said the same in 2016.  

For Community Spirit Bank, the decision to move from its longtime core provider to CSI coincided with a push to grow and innovate. Management was keen to add services that had proven prohibitively expensive or “a no-go” because of its core’s limitations, according to Mays. “We knew we had to quit talking about a conversion and take action,” she says.

Jonathan Baltzell, president of bank solutions at Jack Henry, notes that certain “organic triggers” spur community banks to rethink their existing core arrangements. Some, for instance, begin looking around 18 to 24 months before a core contract is set to expire. He is convinced that the best reason to reevaluate is “when the core system is no longer supporting a bank’s strategic priorities.”

Dudley White, president of core account processing solutions at Fiserv, agrees, viewing a core conversion as a business decision. “A fancy new tool” or technology isn’t reason alone to make a switch, he says.

Other community banks seek a change after getting fed up with disappointing customer service, according to Paul Jones, vice president of professional services at DCI. 

“I hear frustration that [some banks] can’t call in and get a live person,” he says. “They’ve got to submit a ticket, and then they might hear something back or they might not. And if they don’t hear back? Their only recourse is submitting another ticket.”

Step 2: Calculate conversion costs

Sticker shock should not dissuade a community bank from exploring a core change, since the final price tag might be less than anticipated, contends Mays. This was the case at Community Spirit Bank. 

For help with budgeting, she highly recommends finding a consultant who specializes in core conversions. By hiring Trent Fleming in Tennessee, she is convinced that the bank saved money on its conversion. Not only did Fleming advise locking in a better price through a longer, 10-year contract with CSI, he also identified savings by eliminating ancillary vendors that were now unnecessary.

Melissa McNutt, CEO of Neighbors Bank, also praised her bank’s core conversion consultant—Genesys Technology Group—for providing price comparisons and negotiating a favorable contract.

Step 3: Have the right internal conversations

Conversions succeed “when people are engaged early and often. And that’s not just the C-suite, but also the key contributors responsible for making the business run every day,” says Baltzell. Involving the right people and keeping messages positive help “when it comes to evangelizing the change,” he adds.

Mays agrees, noting that as Community Spirit Bank interviewed core providers, everyone from department heads to branch managers sat in on demos and investigated options.  

“It wasn’t just executive management voting on what they liked best,” she says. “We literally voted as a democracy. The people who would be taking on the challenges of converting their departments were part of the decision as well.”

Step 4: Evaluate providers

At Neighbors Bank, McNutt narrowed the field to five providers before beginning an in-depth interview process. Each of the five providers completed on-site presentations, and three potential providers completed RFPs, along with Neighbors' existing provider. McNutt then contacted references for the top three candidates, an exercise she found extremely enlightening. The community bank also paid visits to two providers at their physical headquarters—another practice she heartily endorses.

Mays offers similar advice, suggesting bankers take note of how promptly prospective providers answer inquiries. “If they’re not going to be responsive in this phase, how will it be when they’ve got your contract for 10 years?” she says.

Step 5: Listen to peers

Mays knew community banker colleagues who left the industry due to stress from a core conversion, so she braced herself for challenging times. 

Looking back on how she might have improved the conversion experience, she says it would have been beneficial to stagger the timelines for the debit card and core conversions, if possible. 

“I knew it would be a friction point for customers to go through the card change and the digital banking change at the same time,” she says, “but I didn’t know the magnitude of the pain involved.”

For McNutt, the biggest challenge was “the time management piece.” She used a project board to mark off completed tasks and relied on weekly discussions to clarify what still needed to be done.

As parting advice, McNutt urges fellow bankers to have faith in a positive outcome. 

“Know you’re going to come out the other side,” she says. “Whatever decisions you make, it’s going to work out.”