From in-house to outsource
Overall, there has been a continued shift in the US to outsource solutions. Chicago-based Oak Bank had been using an in-house platform, Jack Henry’s Core Director, onsite since the bank’s launch in 1970. However, in 2012 it switched to Fiserv’s Premier core banking system on an outsourced basis. The bank was seeking to create cost efficiencies, decrease overheads and compete with other community banks as well as larger players. ‘It just wasn’t working physically for us any more, in terms of personnel and expertise, and we had a server room with about 25 servers and different machines running,’ noted Rob Sullivan, vice- president and CFO at Oak Bank. ‘It was overwhelming.’ With the new system in place, the community bank expected to be able to integrate, innovate and improve the functionality of digital product offerings, said Sullivan. ‘We will be able to tap into a couple of generations that we have never been able to tap into, and we are hoping to attract the children and grandchildren of our long-term customers.’ Oak Bank had around 5000 customers, $220 million in assets and just one branch but had an ambitious aim to ‘compete with our bigger peers like JP Morgan Chase’, Sullivan stated. Similarly, Hawaii National Bank moved from long- standing use of an in-house system to an outsource alternative. It selected the PhoenixEFE platform from Harland Financial Solutions to replace its 14-year-old Premier system from Fiserv. The project aimed to help the bank to reduce periodic capital expenditures for hardware and software, as well as operational expenses related to computer facilities, disaster
recovery and business Improved channel delivery
Improved delivery channels is certainly another driver. It was the main aim identified by Donna Webb, EVP and group operations manager at Georgia-based Pinnacle Bank, a community bank with $578 million in assets. During the second half of 2013 it set about migrating to an outsourced version of Fiserv’s Precision core banking solution to replace a legacy offering from Jack Henry. The bank was looking for ‘more integration, so we could give customers an efficient experience with consistent information across our service delivery channels’, she said.
Applications such as for internet banking were
already present but ran on different systems to the legacy core. This, said Webb, created ‘a more complicated file management system’ at the bank than would otherwise be the case, hence the aim of having a more integrated environment after the replacement. The bank particularly wanted to avoid siloes developing between business areas.
Along similar lines, Michigan First Credit Union sought a system that would be truly 24/7 due to heightened customer demands. It selected the Keystone platform from
14
Hawaii National Bank
continuity by outsourcing the new system. ‘This is a major change for Hawaii National Bank as it has utilised an in- house solution since 1998,’ said Bryan Luke, executive vice- president at Hawaii National.
Criteria laid down by Hawaii National was that the vendor had to offer an outsourced solution, have at least 100 banks as customers, and target commercial institutions between $300 million and $1 billion of assets. ‘The bank had preferred ‘best of suite’ rather than ‘best of breed’ solutions to reduce operational complexity, simplify vendor management and manage costs,’ said Luke. ‘But service, integration, culture and who they’re really targeted at, were factors for us.’
Corelation, a relatively new player in the US credit union software market, to replace its 30-year-old Symitar system from Jack Henry. Michael Poulos, president and CEO of Michigan First, said: ‘In the day of 24/7 access to your banking information, members don’t want to log into the system to find out that their history from the day before isn’t there anymore.’ The second reason was reputation as the credit union had confidence in Corelation’s creativity and its system’s flexibility of design. With around 85,000 members and $624 million in assets, the credit union selected Keystone for its ability to make Michigan First become ‘faster, better and larger’ as the system would provide ‘a faster service, and will offer different products and services, as well as a 24/7 call center’, asserted Poulos. Credit unions such as Michigan First have been in part focusing on channels through the need to attract younger customers. The average age of members is around 47 years old, somewhat above the main borrowing age span of Americans. Technology is often at least part of the strategy to address this, including more interactive facilities in the branch, banking on multiple devices and remote deposit capture.
US Financial Services Technology Market Report |
www.ibsintelligence.com
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