Recession Can Be a Ripe Time for Core Conversion

Kevin Jepson
October 6, 2009 | COMMENTS

The current recession is the perfect time to convert to a new core system that can help you make the most of the impending economic recovery, according to a $98-million credit union in Metairie, Louisiana.

"At a time when the economy is a little slow, we want to position ourselves for future growth and capture market share from some of the banks," said Janet Sanders, president and CEO at Greater New Orleans Federal Credit Union (GNO), which is in the middle of switching out its core. "The new system has the bells and whistles that will allow us to advance."

When GNO's new Symitar Episys system goes "live" in February, it will be tied to an exhaustive list of bundled Symitar services that are impossible, cumbersome, or expensive with the current core, said Sanders.

New services will include business checking and eventually business lending, ATM driving and network switching, debit card issuance and processing, real-time credit card transaction processing; loan underwriting, cross-sales, imaging; disaster recovery, signature pads, biometric verification for employees; and a common user interface that unites multiple systems.

This "investment in the future" will cost the credit union 20% more than the current core, Sanders said. "This is hard, and it costs money, but you need to have the technology infrastructure in place in order to grow. Next year we'll be positioned to reap the benefits."

GNO plans to reap ROI (and carefully measure it) in the form of increased income from business checking and cross-sales, which the new technologies will enable, Sanders explained.

The newfound capabilities should also make employees more efficient, she said. The credit union will employ automated decisioning for the first time, for example, which will quickly process A and B paper loans when lending picks up again, saving the manual labor for riskier decisions.

Growth seems certain for GNO, which has expanded from two branches to five branches in six years. Sanders hopes to add a branch a year and perhaps a mobile branch. Membership is growing about 8% per year, she said.

Ironically, the hurricane-thrashed New Orleans area is faring better than other parts of the nation, suggested Sanders. "There's lots of rebuilding going on, so a lot of money is being pumped into the local economy. We're not in the position that Florida , Michigan and California are in, where unemployment and foreclosures are high."

Symitar fit the core system bill from a strategic standpoint. “We know what we want to accomplish, and this is the way to get there"—and the timing was right in terms of capital, as well, Sanders added. "We have over 15% capital, so we're in a position to spend some money."

The credit union's move to Episys was also fueled by a "complete" turnover in the credit union's top management, said Sanders. "A new system didn't look as scary to us because we didn't have the loyalty to the old system. And no one here argued that we should wait until the economy improves to convert."

Sanders said she is finally hooking up with Episys after 18 years in the credit union industry. "I viewed a Symitar demo about 15 years ago and have thought since then that it would be a great system to have."

This article appeared at www.cujournal.com and is reprinted with permission.