Core processing systems have been undergoing change for a few years now, as Financial Institutions (FI) work to keep up with the demands of their client base. Upgrades to old systems and implementation of new ones is happening across the nation. The typical sequence of events is to select a new core processing system and the ancillary transaction processing options, implement it, and 12 to 24 months later develop a data and analytics strategy that molds to the capabilities of the transaction processing.
At JOHO, we believe this is like putting the cart before the horse, so we developed a new, more streamlined approach to upgrades.
Step #1: Understanding the goals
It’s vital to have a clear grasp of the growth needs of the institution before you begin. There’s little point in trying to adapt your goals to the system you have in place, so if you’re in the process of upgrading now is a good time to ensure your system can scale as you grow. Identify the upper limits of the systems you’re considering, too, and review your FI’s long-term plans to make sure your selection aligns comfortably with those.
Step #2: Analyze current processes
Conduct an analysis of your institution’s current processes, and map it against the desired operational flow. Will the data/analytics strategy you choose require extensive implementation of new processes? Is the FI ready for that? Who will oversee the change management? Who is responsible for data governance? How is access to data controlled? Once you purchase a system or enter into an agreement with a provider, it’s too late to realize at that point that the implementation is impractical.
Step #3: Review the dynamics
If implementing a new data/analytics strategy requires changes to your management structure, it’s essential that you perform a comprehensive review of the dynamics governing both the current and the proposed operational, management, executive, and board makeup. This is an integral part of determining your FI’s readiness for taking on advanced processing.
Step #4: Choose a strategy
Armed with the information from steps 1 through 3, you will be in a good position to decide on a comprehensive data/analytics strategy that will support the needs and goals of your FI and mitigate the typical financial institution risks you face. At this point, you can begin reviewing vendor solutions with the appropriate endpoint for your requirements, and if necessary ask them to customize their solutions to ensure you get what you need.
Step #5: Choose a vendor
Contrary to popular belief, choosing a vendor should be based on suppliers of the strategy you want, not the other way around. Authentic vendors will be willing and able to tailor their products to accommodate FI clients, so it should not be necessary to compromise. Guide your institution through the process of identifying and negotiating with vendors who can offer the solutions you need. These should provide secure, operational systems that contribute positively to the information flow in your “new,” information-oriented organization.
Sound like a lot to deal with? The JOHO AYR™ (Are You Ready) assessment is a 2-week process that provides a professional evaluation of your FI’s present state compared with where you want to be, and delivers comprehensive recommendations for your management team.