How Each Bank Department Contributes to a Core Conversion

What does it take to successfully convert a core processing system? Teamwork, from practically everyone at the bank. It starts months, even years, before the actual switch date.

“In any core conversion, staff in every key area of the bank should be involved, so everyone is on the same page about why change is happening,” says Kevin Tweddle, ICBA’s senior executive vice president of innovation.

To start, he advises, a community bank should form a working group comprising employees from all areas of the institution. This group should evaluate how a new core can best meet the needs of the bank’s future strategy and how they will measure whether the desired outcomes have been met.

Community Bank of Parkersburg in Parkersburg, West Virginia, let a third of its employees, from all areas of the bank and at all levels, help select the new core vendor, says Susan A. Barber, president and CEO of the $330 million-asset bank.

Each function area had a representative team observe a demonstration of each potential vendor. Then, they were asked to think of pros and cons and vote for their preferred vendor, Barber says. The community bank’s board made the ultimate decision after weighing each function area’s perspective.

“We really wanted to get buy-in, and so we needed to involve everyone,” she says. “It was a big deal for them to be able to have that voice and to know that not only was it going to be better for the bank, but possibly better for them personally.”

We asked experts about the roles each functional area plays in a conversion.

C-suite

While a community bank’s chief information officer is typically involved in any conversion, at least one other senior executive, such as the CEO, COO or CFO, should also provide periodic support throughout the process, Tweddle says.

These leaders should make sure the bank is meeting the mark on what it’s trying to accomplish with the conversion and how it will ultimately affect the bank’s strategy.

Senior executives can also provide positivity about the desired outcomes, as employee frustrations often mount throughout the conversion process, says Julie Carter, vice president of customer service at DCI in Hutchinson, Kansas.

Employees with conversion responsibilities on top of their day-to-day work can get overwhelmed. “The executives need to make sure that they’re promoting the conversion in a positive light, reminding people of the bigger picture of why they were making the change in the first place,” Carter says. “It’s all for the betterment of the bank.”

Back-office deposit operations

Three employees from $242 million-asset The Bank of Monroe’s deposit ops team were responsible for ensuring the institution was pulling the right deposit information from the existing core into the new core, says Kim Estep, vice president and business development/loan officer, who served as project manager for the conversion.

The Union, West Virginia, bank’s employees needed to map the correct balances of each deposit account, as well as the correct interest on term accounts, the correct fee schedules and the correct statement cycle for each account, Estep says. The employees also had to make sure the information was correctly imported into the bank’s digital banking channels.

“After learning the new system and the functionality of it, they became our super users for the entire program,” she says. “They did all the training for the tellers’ day-to-day work and for new account opening as well.”

At Community Bank of Parkersburg, questionnaires provided by its partner ICI Consulting helped deposit ops—as well as other function areas—determine whether new parameters should be set for the new core, such as cutoff times for decisions on nonsufficient funds, and whether the bank or the core vendor would send notices, Barber says.

Loans

While The Bank of Monroe didn’t convert its loan underwriting system, the loan department nevertheless needed to determine whether the new core was sending the correct borrower payment information to their accounts. The department did so by mapping its loan data from the old core to the new core.

“That was probably the most detailed part of the whole project,” says Jim King, president and CEO.

Questionnaires from ICI Consulting helped the loan department at Community Bank of Parkersburg identify pain points in the old core system and determine needs for the new one. During spec reviews, ICI helped align terms, payment structures, repricing and variable interest rate repricing to match notes and the old core system, Barber says.

IT

Community Bank of Parkersburg’s IT team was responsible for making sure new teller machines and signature pads could connect to the new core, says Brian Cayton, senior vice president, director of lending and conversion project manager. Before the conversion date, the team tested whether the new hardware and software would work correctly together.

A community bank’s IT team should also make sure desired APIs can be integrated into a modern core, now typically built with open architecture. “The different departments would also need to test drive those APIs that would provide the functionality they want,” Tweddle says. “If it’s seamless for them, then they’ll feel like it might be seamless for the customers, too.”

Marketing

Estep is also The Bank of Monroe’s marketing director—the position in charge of sharing information about the conversion process to customers. The community bank mailed an informational booklet on the upcoming conversion to customers and created emails, branch flyers and social media posts about it.

Community Bank of Parkersburg’s marketing director followed a similar process with the help of staff across the bank. “The conversion booklet gave step-by-step details about the timeline: ‘You will not have access to your debit card this day’, ‘You should be getting your new card this day,’ ‘You won’t have access to digital banking this day but will have access this day,’” Barber says.

Paul Jones, DCI’s vice president of professional services, says that some of its bank clients identified extremely important customers and assigned employees to each customer to set expectations during the conversion.

Branches and call centers

Before the actual conversion, banks should let employees from every branch test the new core’s functionalities, says Tom Choate, managing director of operations for bank solutions at Jack Henry in Monett, Missouri.

“That gives them a firsthand look at how the data looks, and they get to hear some of the conversations between Jack Henry’s core team and the bank on why things are mapped a certain way or why we set up products a certain way,” Choate says. “You’ve now also created super users on [the] front end, who will then be able to better answer customer questions about the conversion.”

Branch managers at Community Bank of Parkersburg were also invited to complete some of the other function areas’ questionnaires before the conversion to give them a say in how to make various processes more efficient within the new core, Barber says.

Compliance

A community bank’s compliance team needs to check that all disclosures, statements and notices are appropriate for the new core’s functionality, according to Choate. 

“A lot of times, the banks will take this opportunity to reinvent themselves by taking advantage of new functionality,” he says. “So, you need to [decide] if your disclosures to customers need to change based on how you’re setting up your new product set, and you need to make sure compliance is involved in that process.”

This also involves compliance for other regulations, including those pertaining to BSA/AML regulations, Barber says.

Moreover, any communication materials sent to customers about the conversion need to be reviewed by the compliance team, Estep says.

Human resources

Choate believes a community bank’s HR team should make sure enough employees are scheduled to work during the actual conversion time while finding ways to boost morale beforehand and afterward by granting extra time off or other perks.

“We had a bank client create a Monopoly board,” he says, “and as employees got training and then helped in the conversion, they moved farther along the Monopoly board and were rewarded with T-shirts, gift cards, an extra PTO day or a week off.”