Member Benefits: Core competencies


Community banks are taking a page out of ICBA’s Core Processor Resource Guide for better vendor relations.

By Cary Whaley, ICBA

Kathy Underwood was “nervous” to go through the core conversion process. “I read somewhere that undergoing a core conversion is like doing a heart transplant on a person running a marathon,” recalls the president and CEO of $485 million-asset Ledyard National Bank in Hanover, N.H.

But Underwood’s community bank was left with little alternative if it hoped to achieve its long-term business objectives. The straw that broke the camel’s back was when Underwood found out her provider couldn’t support the bank’s plans for instant card issuance. “That’s when I said, if they can’t do something like that, then they aren’t our partner going forward,” she says.

It was about that time that Underwood learned that ICBA’s Core Processor Resource Guide was nearing completion. The guide aims to help community banks like hers evaluate their core processor to maximize their return on investment. Underwood admits now that if she had the core processor guide earlier, her community bank “probably would have undertaken [the system conversion] years earlier.”

Underwood adds, “One of the things the guide did was reinforce our belief that we needed a true strategic partner. She says Ledyard National Bank ended up bringing in an outside consultant “because we weren’t moving fast enough on our own.” Even with an expert’s assistance, Underwood says, ICBA’s guide was a valued resource. The consultant “followed the steps that the guide gave us, which was very helpful in working through the process.”

Mike Parisi, Ledyard National Bank’s senior vice president and senior retail banking officer, agrees. “I particularly liked the strategic questions,” he notes. “These questions became especially important when we had our provider list narrowed down to which system and which partner would help us achieve our strategic goals.”

He advises other banks looking to improve their core processor relationship to “take time to explore [your] options, and task the providers you are interviewing to demonstrate how you can use their products to drive revenue growth.” Parisi says the cost to change was “lower than I anticipated, and the opportunity to increase revenue and create new revenue streams is much greater than I anticipated.”

Reading the fine print

CNB Bank & Trust in Carlinville, Ill., also underwent a thorough assessment of its core processor system before signing a renewal extension. Shawn Davis, president and CEO of the $930 million-asset community bank, says ICBA’s resource guide section on contract negotiations was particularly helpful.

“Everything’s negotiable. That’s what the document drives home,” says Davis. He also notes the importance of having fees clearly defined, and working within a realistic timeframe to evaluate the system’s capabilities and assess viable alternatives, should the need arise.

“If you’re unsuccessful in negotiating the contract, you still have to negotiate the conversion,” he says. “Six months is not enough time, and this document spells out why.”

CNB Bank also followed the guide’s advice about defining data ownership and access in its contract, and securing certain indemnity rights surrounding the sale or lease of software. “You can’t start the process too early in your contract, and if you think you need help, get it,” Davis advises.

For $374 million-asset Coulee Bank, it was paramount to bring in outside help to manage its core processor evaluations process and hammer out favorable terms, explains Mike Gargaro, chief operating officer at the La Crosse, Wis.-based community bank. The process was extensive, and the contract was signed a year to the day from when they hired the consultant. “It was time and money well spent,” says Gargaro, who notes the new contract achieved the bank’s goal during its vendor negotiations.

Getting from point A to point B was a team effort, Gargaro stresses. During the conversion, the community bank maintained weekly meetings with the vendor and held its own internal meetings, which he says helped keep the project on track.

From the get-go, “we didn’t pull any punches,” says Gargaro. “We let people know what we were doing and incentivized employees to test out system features.” The bank even brought in catered meals and sponsored back massages for staff during the lengthy days of final testing before going live. Staying focused and working as a team helped Coulee Bank make it through difficult days, like when Hurricane Irma threatened to destroy its carefully laid plans to transfer data and data centers on the weekend of the conversion, he says.

Gargaro has no regrets and says that now that the conversion is behind them, Coulee Bank’s employees and customers are beginning to reap the benefits. “As part of the conversion, we also converted debit cards into a more streamlined process,” he says. “So now we can add cards at a single entry point.”

The bank also added enhanced fraud alert features to its mobile banking offering and a Secure Swipe feature that lets customers remotely activate or deactivate their cards.
“We have customers using it already,” Gargaro says, “which we are pretty excited about.”

The community banker view

Community bankers on the core conversion process

“I read somewhere that undergoing a core conversion is like doing a heart transplant on a person running a marathon.”
—Kathy Underwood, Ledyard National Bank

“Six months is not enough time, and this document spells out why.”
—Shawn Davis, CNB Bank & Trust, on contract negotiations

“It was time and money well spent.”
—Mike Gargaro, Coulee Bank, on hiring outside help to manage its core processor evaluation process

Get the guide

To download ICBA’s Core Processor Resource Guide, visit

Cary Whaley ( is ICBA’s first vice president of payments and technology policy