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IS IT TIME TO MAKE THE LEAP TO A NEW, BETTER CORE PROCESSOR?

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u003ch6u003eSIX WAYS AN EXPERT NEGOTIATOR CAN IMPACT RESULTSu003c/h6u003enu003cdiv class=u0022main_contentu0022u003ennThe days of floppy disks, dial-up modems and VHS tapes have come and gone, and weu2019ve moved on to ever-more advanced technology. Yet many community banks and credit unions still cling to their outdated core processing software. What gives?nnu0026nbsp;nnDue to a number of factors, many financial institutions may be using core software purchased 20 to 30 years ago. To keep up with changing technology and ways of doing business, a Band-Aid solution has been to layer u201cancillaryu201d products on top of it, like online and mobile banking software. But this creates a muddled IT situation that makes it difficult to manage, launch new products and keep up with regulations.nnu0026nbsp;nnIs that really the best way to go about business for your institution or your account holders?nnu003cstrongu003eu00a0u003c/strongu003ennu003cstrongu003eItu2019s time to tear off the Band-Aidu003c/strongu003ennAccording to industry reports, there are several reasons cited for NOT changing core processors. Hesitance to impinge on staff time, fear of account holders feeling the impact during the switch and price ranked at the top of the list.nnu0026nbsp;nnTo sum it up, it has to do with not having enough time to evaluate all of the options and do a thorough comparison.nnu0026nbsp;nnThis mirrors what Iu2019ve seen from clients through the years, as well. Pursuing a new core processor is a huge undertaking. As a result, many banks and credit unions will delay beginning the process as long as possible to avoid dealing with the aforementioned side effects. But if your system is outdated, youu2019re only making things worse by delaying the inevitable.nnu0026nbsp;nnItu2019s time to get over the fear, put a plan in place and rip off that Band-Aid so you can start reaping the benefits of an updated core processor.nnu003cstrongu003eu00a0u003c/strongu003ennu003cstrongu003eAll hands on deck u2014 and then someu003c/strongu003ennAs I mentioned, a core processor conversion is a long process. Itu2019s best to start two years before your current core processor contract expires. During this time, youu2019ll likely take on few if any other large initiatives and you may need more people power along the way.nnu0026nbsp;nnTo provide the best service to your account holders and not overload your current staff, donu2019t be afraid to hire temporary support during this timeframe. Itu2019s a common practice and can even lead you to individuals that have the potential to join your organization full-time, down the road. A third-party recruiter that specializes in the financial industry can help you find the perfect fit for temporary positions.nnu0026nbsp;nnAnd since you canu2019t magically create more time in the day, you may want to consider hiring an expertu00a0u003ca href=u0022https://www.jmfa.com/Services/Contract-Renegotiationsu0022u003econtract negotiatoru003c/au003eu00a0that can take the lead for you on the core conversion process.nnu003cstrongu003eu00a0u003c/strongu003ennu003cstrongu003eWhat a third-party negotiator can do for youu003c/strongu003ennProfessional contract negotiators streamline the process and find the best value for you. Extensive industry experience and knowledge give your institution the upper hand when evaluating contracts and negotiating the bestu00a0terms,u00a0because professionals know what to ask for and how much other institutions pay for similar services.nnu0026nbsp;nnIn a lengthy process like core conversions, a professional contract review provides even more benefits along the way, including:nnu0026nbsp;nnu003cstrongu003e1.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eDiscovery.u00a0u003c/strongu003eAfter a thorough review of your current situation u2014 including any problems staff may be experiencing with the current system, plus any wants, needs and new application requirements u2014 your consultant can work with you to find the best solution for your organization.nnu003cstrongu003e2.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eRFPs.u003c/strongu003eu00a0Acquiring competitive bids for services can be a time-consuming process. A contract negotiator will send out requests for proposals (RFPs) to trusted vendors, on your behalf.nnu003cstrongu003e3.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eEvaluation.u00a0u003c/strongu003eA contract expert can provide an apples-to-apples comparison of theu00a0RFPsu00a0and help your team narrow down your options, providing clarification, guidanceu00a0andu00a0advice.nnu003cstrongu003e4.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eCoordination.u003c/strongu003eu00a0u00a0To save time, the consultant will set up all meetings between your staff, the negotiations teamu00a0andu00a0vendors u2014 including demos and presentations u2014 so you donu2019t have to.nnu003cstrongu003e5.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eNegotiations.u00a0u003c/strongu003eA professional negotiator will review all vendor proposals, using a proprietary database, to ensure you are receiving the very best rates.nnu003cstrongu003e6.u00a0u00a0u00a0u00a0u00a0u003c/strongu003eu003cstrongu003eFinal negotiations.u00a0u003c/strongu003eWhen you have chosen a vendor, the contract experts will complete the u201cbest and final offeru201d negotiations, contract order and contract review. After you sign the contract, they will transition you to the vendoru2019s implementation team.nnu0026nbsp;nnAs you can see, having help along the way can prevent your staff from getting bogged down by the administrative details of the search process. Plus, when it comes time to negotiate, you will get the best deal and most favorable terms.nnu003cstrongu003eu00a0u003c/strongu003ennu003cstrongu003eA core conversion success storyu003c/strongu003ennOur contract negotiations team recently helped a client institution complete a core processor conversion. In this case, our client had already narrowed the options to two vendors. From there, we helped evaluate each vendoru2019s proposal and negotiated the final offers for our client to choose from.nnu0026nbsp;nnHereu2019s their story:nnu003cemu003eThey had been on the system for over 20 years. It was the first u2014 and only u2014 core processing system they had ever used. They had no real idea how outdated the system was until we started showing them what else was available.u00a0Plus, the vendor had not released any enhancements in quite some time and they werenu2019t fixing anything, either u2014 just patching or offering au00a0work-around. It seemed to our client that the vendor was phasing out the system.u003c/emu003ennu003cemu003eu00a0u003c/emu003ennu003cemu003eAlso, over the past 10 years, the institution had increased loan volume and the existing core system seemed to them more challenging for their changing needs. In all that time, the rep who serviced the account never offered a different core that was better suited for the institution. If that would have happened, the vendor might have been able to keep them as a client!u003c/emu003ennu003cstrongu003eu003cemu003eu00a0u003c/emu003eu003c/strongu003ennu003cstrongu003eu003cemu003eBy seeking expert advice on evaluating options the institution was able to make the switch without increasing costs.u003c/emu003eu003c/strongu003ennu003cemu003eu00a0u003c/emu003ennu003cemu003eThey got a much better system for the same price. In the end, they are paying less for their item processing and clearings, and for debit card processing. They also received a huge incentive to switch, so that took care of implementation costs.u003c/emu003ennu0026nbsp;nnAfter implementing the new core processor, our client experienced:nu003culu003en tu003cliu003eimproved operating efficiency;u003c/liu003enu003c/ulu003enu003culu003en tu003cliu003ethe capability to provide a better online and mobile banking experience to account holders;u003c/liu003enu003c/ulu003enu003culu003en tu003cliu003ea much better solution for commercial loan repayment structures; andu003c/liu003enu003c/ulu003enu003culu003en tu003cliu003ethe ability to offer more deposit products and services like sweep accounts and rewards checking.u003c/liu003enu003c/ulu003enu003cstrongu003eStart thinking aheadu003c/strongu003ennThe core conversion process can take some time, but the efficiencies, value and growth potential youu2019ll see afterward will make it more than worth it.nnu0026nbsp;nnIf youu2019re not satisfied with your current core processor, check your contract today to see when itu2019s set to expire. Mark your calendar for when itu2019s 24 months from the expiration dateu2014and make a plan to tackle this project head-on.nnu003c/divu003e

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