Core processing technology is not what it used to be. The acceptance of “what you see is what you get” technology is becoming less common. Today’s ideal technology partner must be agile, advanced, and engaged with the bank as a collaborator when developing updates and creating new products and services.
Bank technology today can be seen as a profit center vs. expense, and as a cornerstone of a bank’s strategic business plan. It should help banks survey and adjust their strategy, and do so at a cost and time savings for both the bank and its customer. And it should be more than just crunching numbers.
Emerging Core Trend
Banks today must anticipate and adjust to the varied needs of their account holders. They should look at their core processing relationships with the same expectations. It is no longer enough for banks to tolerate their core relationship. Institutions can and should demand a responsive and interactive partnership from their technology provider. Core technology should be functional, flexible, continually updated, and provided by a company structured around client satisfaction and mutual success.
Functionality
There are several questions banks should ask of their core technology. Can it make me more profitable? Uniquely competitive? Reduce expenses? Integrate with my other technology choices? Can the company provide a clear, honest description of its architecture, infrastructure and operation?
Functional core technology is a strategic advantage and vital component of business and should be designed and managed around the bank’s key goals – 1) to help retain customers and 2) to better compete with other financial institutions through product customization and service automation through its bank management system. As an example, Tioga-Franklin Savings Bank in Philadelphia, PA, cultivated a 140-year-old reputation for stability and personal service, but realized they needed more than that to compete in today’s rapidly changing banking environment. Robert Lockyer, Tioga-Franklin’s president and CEO, says, “To keep Tioga-Franklin relevant for another 140 years means we need technology that helps us easily respond to regulatory and customer demands without changing who we are.”
Struggling with antiquated, manual processes, limited support and the inability to offer new products to their customers, Tioga-Franklin underwent a year-long technology search and partnered with Data Center Inc. (DCI), the Hutchinson, Kansas-based developer of the award-winning iCore360® core banking software. Tioga-Franklin gained vast improvements in organizational efficiencies through workflow automation and regulatory simplification that help focus more staff and resources on new services and customer relationships.
Lindsay Butler, Tioga-Franklin’s compliance officer and systems administrator, says, “The iCore360° demo showed us how much we’d been missing out on; how much more efficient we could be, and how much deeper we could expand our customer relationships. We’re already planning new product lines, and even routine lines of credit, account origination and online banking will be easier for us to manage.”
In another example, Fred Henrich, president of Coatesville, PA-based Coatesville Savings Bank said, “We looked at a lot of companies and finally chose iCore360° as our core because its flexibility in design and operation will more easily grow with us and expand our competitive service capabilities as we need it.”
However, technology alone is not enough. It is the mixture of innovation with responsive support and collaborative development with a core processor that allows banks to offer the highest level of service.
Flexibility
A core processor must be flexible, collaborative and responsive, adapting to your needs and growth. The best core processor/bank relationship should involve communication from both sides – with support and product development representative of industry trends as well as client needs and input.
Tioga-Franklin’s president, Robert Lockyer, is quick to point out that, as impressed as they were with the iCore360° software, it was the people at DCI – the staff, executives, owners and customers – that tipped the scales, because, as he puts it, “They match our values. They all genuinely care and understand us on a professional and personal level. DCI is a company we can relate to and trust.”
Coatesville’s Fred Henrich adds, “Our core processor, DCI, is also a great partner. We look forward to their frequent visits and enjoy having access to their management and a voice in their development process.”
Company Culture and Structure
Banks need a core processing partner they can count on for the long haul. Institutions should not hesitate to ask – Is my core technology partner stable and positioned for growth? What are the plans for not only product development, but for the company overall? What is the business model? How are core system decisions made and by whom? Is the company driven more by stockholder expectations or the banks it serves? Is it likely to be aquired or sold?
Mike Cearely, executive vice president of Sublette, KS-based Centera Bank said, “Core processors that understand the value of their customers’ success, and take a unique role in achieving that success, set themselves apart because they are rare.”
It is not enough for a core technology provider to claim good service. The company must also embrace and demonstrate a company culture and structure driven by customer satisfaction and success.
“Our core processor’s unique ownership, advice and regular technology enhancements were a major reason we chose to implement their system – it is unique in an industry where that is rarely the case,” said Thomas Ellison, chairman of Nacogdoches, TX-based Commercial Bank of Texas. “The contact with our core processor throughout the year has a significant influence on their product development and business model, which directly applies client response into technology offerings.”
DCI is the developer of the iCore360® core processing software and related technologies for community banks nationwide. DCI is privately owned by banks, with clients serving as board members and user group leaders. www.datacenterinc.com.
Core Processor Relationship Checklist
- What value does the technology bring my bank?
- What do terms like .NET or web-based really mean compared to others?
- Will there be upgrade costs at conversion?
- What is the cost of upgrades during contract?
- What is the ownership structure and business model of the core technology company?
- What is the potential of this company to be sold or the software to be sunset?
- What does the processor say they will deliver, and how do they prove it?
- What do their customers say they deliver?