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5 steps to optimizing your core system

A competitive market offers key core system opportunities


Innovative financial institutions leverage technology to provide competitive products and services and drive efficiency. Optimization of the core processing environment is essential to maintaining a technology infrastructure that can support current and future needs. Currently, across the industry, a very competitive market in core processing software, services and deployment options is helping financial institutions to control cost and align functionality with the strategic direction of their organizations. Savings on core processing are helping offset increased spending for digital banking, security, analytics and compliance systems. No matter what your current contract situation is, it is possible for your financial institution to leverage this competitive environment to lower cost and expand functionality with the core.

The following five steps can help your organization transform core processing.

Step 1 – Complete a comprehensive evaluation of your organization’s needs. This evaluation should include all areas of the business, not just operations and information technology. A formal process assures alignment with the business strategic plan and technology infrastructure goals. The needs evaluation serves as the basis for a formal proposal request that can be used to match vendor capabilities to the needs of the organization.

Step 2 – Appoint a search committee comprised of representatives from all business lines. Conduct a search among qualified system providers for solutions that are a match for your needs. Structure the search process to keep the process on track with target deadlines agreed to by all stakeholders. Develop a formal request for proposal (RFP) and send it to selected vendors.

Step 3 – Evaluate responses to the RFP. Compare vendors against the financial institution’s requirements and priorities. Normalize financials across all responses to support a fair comparison. Develop a scoring methodology to allow the search committee to evaluate vendors in a systematic and thorough manner.

Step 4 – Negotiate the agreement. The negotiation process is critical in order to protect the financial institution’s investment in the selected solution. Understand and negotiate pricing, term, service level, termination and price change triggers to avoid agreements that are one-sided in favor of the service provider. Both legal counsel and individuals familiar with the processing and business functions affected by the core system should participate in this process.

Step 5 – Complete the conversion to the new core system. Major system implementations are more successful when there is ownership and strong project management at the financial institution. A project manager who can coordinate efforts across your organization is a critical factor to a successful conversion. Note that most vendors offer project management but their focus is primarily on their data conversion requirements.

Financial institutions often choose to work with an independent consultant with broad experience in the financial institution industry to guide the organization through the evaluation and optimization process.  A qualified consultant understands that there is no single best choice in the market and brings knowledge across the landscape of solutions and applications available in the market.  An independent consultant provides unbiased guidance to determine the best match for your financial institution.


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