COVID-19 is changing core conversions. Here’s how

As a result of COVID-19, some bank functions are being done remotely. But what about transitioning to a new core provider? Both banks and vendors report that there are clear benefits—and some drawbacks—to switching core systems remotely.

By Katie Kuehner-Hebert

Prior to COVID-19, executives at Data Center Inc. (DCI) had been discussing the possibility of using new technologies to conduct core conversions remotely, though the company had not yet moved on those initiatives.

But after the pandemic shutdowns delayed the implementation of scheduled conversions, DCI’s team began videoconferencing instead of traveling to clients’ physical locations, says Sarah Fankhauser, president and CEO of the Hutchinson, Kan.-based company. While the actual conversions continued to be conducted at DCI—the provider hosts 90% of its services—validating core data was conducted with bank staff via videoconference.

“We could have done it all over the phone without a video, but it’s just not the same,” Fankhauser says. “With the video, we’re able to look at each other’s data at the same time. If we were to send emails of the data, that would have slowed down the process.”

The pros of remote conversions

Another core provider, FIS Global, uses a Live Conversion Weekend Playbook for remote conversions. As part of the playbook, its conversion team stands ready to answer any question on a combined conference line. If an answer requires additional time and resources, FIS and bank staff drop from the combined line and have a separate call. Once completed, team members rejoin the main conference line.

“This is one important example of how we can offer our newly converted clients the immediate and right-timed service they expect when they are learning a new system,” says Maria Schuld, division executive of Americas banking solutions at the Jacksonville, Fla.-based company.

“Ease of communication and access to resources is a major boon in a stressful time. Based on the positive feedback from the banks that have had to participate in this manner, we intend to have the remote support continue into the future.”
—Maria Schuld, FIS Global

While the FIS team may not be physically present at clients’ locations, the team is still able to provide its traditional level of service by proactively monitoring systems, defining touch-point processes with key stakeholders, defining clear communication channels for all team resources and quickly responding to any need that arises, Schuld says.

There are some clear benefits of this remote process, she says. Banks have more immediate access to required functional and technical support areas, which makes resolving issues faster and scheduling any pop-up meetings easier. Plus, core providers save time on travel, giving them more time to support the community bank.

“This ease of communication and access to resources is a major boon in a stressful time,” Schuld says. “Based on the positive feedback from the banks that have had to participate in this manner, we intend to have the remote support continue into the future.”

“We have been doing routine training in a remote format for several years, so, more often than not, we feel like our education and training sessions … are still very successful based on the feedback we get from customers.”
—Paul Jones, Data Center Inc.

Other benefits of a remote conversion include the ability “to level the playing field” regarding bank staff training, says Tyler Lentz of Cedar Park, Texas-based IBT Apps. In the past, banks with multiple branches would employ a “train the trainer” approach, he explains. With remote conversions, IBT Apps can now train everyone, “so there’s no imbalance of who gets first dibs at training.”

“Certain kinds of training can be a little more difficult remotely, because educators are not in the room with bank staff and able to confirm that everyone is fully experiencing the training,” says Paul Jones, DCI’s vice president, professional services. “But we have been doing routine training in a remote format for several years, so, more often than not, we feel like our education and training sessions—nearly 100% remote [in 2020]—are still very successful based on the feedback we get from customers.”

There are drawbacks, too

There are downsides, such as less face-to-face time for relationship building; some financial institutions aren’t equipped for videoconferencing.

“One big drawback of remote conversions is that community banks tend to very people-oriented,” Lentz says, “and a lot of our clients do miss that personal connectivity that comes with being in front of each other, training them and walking them through things.”

However, core providers report few problems. The DCI conversion team is “pleasantly surprised” with how well they’ve gone.

“We were really happy we didn’t have issues,” Fankhauser says. “The conversion process wasn’t delayed, which is very important since all customers have a hard date on conversions or else [they may] face financial penalties from the previous core provider.”

Ensuring that a remote core switch goes smoothly may mean extra prep work. Schuld says banks can increase the success of a remote conversion with effective planning and preparation.

“Participating in training classes, system review sessions and practice opportunities are all critical components of a successful conversion event, whether remote or not,” she says. “Take advantage of these events and you can expect a successful and fully remote conversion.”

Long-term changes

Post-pandemic, Fankhauser doesn’t think DCI will ever go back to completely being onsite unless a particular bank client prefers that. Most likely, there will be some sort of combination of onsite and virtual sessions, which would allow banks to decide what would be the best option for their conversion. “This can also help banks save money and some time,” she adds.

Other vendors are eyeing a hybrid approach. IBT Apps has conducted conversions that are part onsite and part remote, Lentz says. “It does save a significant amount of time,” he says. “Typically, it used to take four weeks for a conversion when we traveled to a site, but a hybrid conversion can cut that time roughly in half. We would just go onsite for a week for data audits and data validation before going live, and then conduct bank staff training remotely via Microsoft Teams.”

If a community bank’s previous core system was hosted in the cloud, it’s easier to convert data to IBT Apps’ cloud-based system using secure file transferprotocol (FTP), Lentz says. But if the previous core was an on-site legacy system, the data has to be transferred via a virtual private network, or VPN. Both can be done remotely, though staff training pre-pandemic had been onsite. Now, even that is offered virtually.

“During the pandemic, our company has taken a hard stance on ensuring employee safety, as well as the safety of our bank customers,” Lentz says. “Post-pandemic, I think remote conversions will continue, mainly because of the cost savings that our customers can realize by going remote. They don’t have to pay for travel and lodging for our employees to come to their bank.”

The pandemic has pushed more community banks to embrace videoconferencing, a trend Lentz says had already been occurring within other industries.

“This is a great way to push more community banks in that direction,” he adds, “as part of a migration to a digital-first mindset.”

A core conversion that switched to virtual

In late 2019, $518 million-asset Southwest National Bank in Wichita, Kan., began converting its core the traditional way, but then the pandemic hit. By March 2020, “everything went virtual,” says Trish Minard, president, CEO and chairman of the board.

How did the virtual switch go? “It’s definitely more efficient for both the core provider and for my folks,” Minard says. “It had been seven years since we had gone through a core conversion, where we had the core people onsite meeting in offices with bank people. More people in the bank was distracting, so using videoconferencing was better in that regard.”

Another benefit was a set start and end time to the work, so people had to be prepared, Minard says. “Five years ago, I do not think a virtual conversion would be as successful as it is now,” she adds.

However, there are drawbacks. “It becomes pretty clear in virtual meetings when someone has little kids or barking dogs, and that can also distract them enough to miss their deadline,” Minard says, adding that some of those problems may subside when kids have gone back to school.

Banks considering a remote switch should determine the best timetable for virtual meetings with their provider. If there is a conversion issue and it isn’t discussed until the weekly meeting, that can cause the process to become backed up, Minard says. Time can be eaten up quickly, so it’s important to address issues right away.

Another issue was that it was almost impossible for the conversion team to understand a problem’s urgency. At one point, Southwest National Bank’s teller transactions were taking a few minutes, but the provider said the issue could be resolved the next morning, not realizing there were long lines of cars.

“But if I had to do it again tomorrow,” she says, “I wouldn’t hesitate to do a virtual conversion with the team we had.”

Katie Kuehner-Hebert is a writer in California.