core-conversion-2-16-16.pngIn today’s ever-changing financial landscape, the board of directors must review important technology decisions that will position the bank for strategic success. One of those important decisions is when, and how, to replace legacy core systems.

A sizable decision facing many financial institutions (FIs) as we head into 2016 is whether adopting new technology—like a cloud-based core banking platform—will better meet the needs of their increasingly tech-savvy customers and strict internal demands. As bricks-and-mortar branches are rapidly becoming a thing of the past, customers have growing expectations for 24/7 mobile transactions and top-notch customer service. Internally, FIs are pressured to increase productivity while cutting costs, creating challenges for those bound by legacy core systems.

Both internal and external pressures seem to point to one solution—adopting new technology, despite the costs and conversion headaches. If properly vetted, third-party technology, especially a modern core, could mean the difference between life and death for small- to mid-sized FIs, enabling them to continue to compete with the banking goliaths and non-bank startups.

In making the business-altering decision to convert to a modern core, boards own the responsibility of challenging management to thoroughly investigate before making the big decision. Below are a few crucial questions board members should ask the C-suite before giving the OK to convert.

  1. Have you done your research? Taking the leap to updated core banking technology is easily a million-dollar decision between conversion costs and the man hours required to oversee the data transition. That’s why conducting thorough research is crucial. Make sure your executive team, especially the CIO, participates in product demos, conducts interviews and in-person meetings with prospective providers, has conversations with previously converted FIs to find out more about how the transition went, and combs through analyst reviews. After concluding the initial research, ask executives to report their findings to the board so directors can ask follow-up questions to ensure all bases are covered before choosing a specific platform.
  2. Can you explain the benefits of modernizing technology with a newer core? It’s important that everyone fully understands the benefits behind adopting advanced core technology, so as to paint a picture of the future of your financial institution. When your CEO or other key executive is explaining the benefits, listen for key indicators like a single sign-on to access all data, individual customer information and detailed reports; streamlined mobile banking features for FI customers; intuitive design and functionality; secure, private-cloud hosting; seamless integrations and round-the-clock support. All of these attributes lead to increased productivity and decreased customer attrition rates.
  3. Does a conversion support our overall business goals? As a board, make sure to tie any big decision back to the institution’s overall goals. If a core conversion will help meet strategic objectives and the above questions have been answered to a satisfactory degree, it sounds like the conversion is the right move.

If your legacy technology is preventing your institution from achieving improved efficiencies, new customer acquisition and improved employee retention, it may be time for the board—in conjunction with the C-suite—to begin exploring more modern core systems. With an expert board of directors and executives armed with the right questions, a modern core conversion can be the key to a more successful and profitable 2016.

Alex Lopatine