By W.B. King
With more organizations seeking an open architecture platform that allows the ability to plug-and-play with varied third parties, some leading core providers are experiencing clients jumping ship, which is the case for Workers Credit Union.
The $2 billion Littleton, Mass.-based credit union’s core provider contract was due to expire at the end of 2022. In earnest, executives undertook a thorough search and discovery process. The goal was to find a core solution to further improve the daily financial wellness of its 110,000 members.
“We were looking for a partner who could help us scale our mission,” said Workers Credit Union Senior Vice President and Chief Information and Operations Officer Joanne White. “In order to do that, we need a more open platform that would give us the ability to add new products and new applications ourselves rather than having the vendor do it for us.”
Core Search and Discovery
In early 2013, Workers Credit Union signed a 10-year core account processing contract with its core vendor. And while White said the credit union’s relationship with the vendor is “very good,” roughly two years ago, with the renewal and/or cancelation date looming, she, along with an internal team, including CEO Doug Petersen and CFO Tim Smith, engaged the Stamford, Conn.-based technology research and consulting company Gartner to assist in vetting prospects.
Eventually four vendors, including Workers Credit Union's current core provider, were placed on a short list.
“We then put together an extensive request for proposal (RFP), which included input from all the various departments in the organization. The RFP went out to the four vendors followed by a round of vendor demos,” White explained.
After a few months, Workers Credit Union decided to partner with the Lake Mary, Fla.-based Finastra, selecting its Fusion Phoenix core banking solution.
“Our unique commitment to serving our members as they work toward their financial goals has positioned us for unprecedented growth,” said Petersen. “We recognize that to best serve our members, we need to continue to add new products and services. With Fusion Phoenix, bringing new services to market will be quicker and easier, and the core will be able to grow with our needs as our membership continues to expand.”
As part of the RFP process, White said the team identified over 125 manual processes and made certain that Finastra could solve existing issues with its core solution.
“The general feeling is of excitement as the staff is ready to implement this for better peer-to-peer support within the credit union staff as well as better supporting members through their everyday transactions,” she said.
Finastra, White noted, scored the highest marks in “just about every category” the credit union needed. “We especially valued the ability for us to maintain being a purpose-driven organization because if we’d gone with another vendor, I think we would have bent our purpose in order to fit that core.”
When it came to contract negotiation, the credit union opted to handle this all-important task in-house.
“We had an internal team that worked on the contract that included our CFO, the business lead for the project, and external legal help,” White said. “Final contract negotiations were done by our CEO.”
When determining return on investment (ROI), Workers Credit Union worked with a team from Finastra to calculate projections. This figure, White explained, was based on improved operational efficiency, reduced risks (by eliminating manual processes), increased wallet share (based on ability to offer new products) and technology total cost of ownership (TCO) reduction.
“This move will save us approximately $2 million each year in various reduced costs,” she said.
Converting
Workers Credit Union’s discovery to contract signing took approximately 18 months. The new core will be operational in November 2022, White noted. In the meanwhile, the current core provider is in the process of assisting the credit union in the transition process.
“They have assigned someone to help us with the decommissioning. As far as implementing the new core, we hired a program manager who will oversee the project. She will be working with our internal project management staff who will be managing the sub-projects,” White said.
Two of the major sub-projects are the integration of the credit union’s 50 Hyosung interactive teller machines (ITMs) and the reconfiguration of its edge (middleware) network, which is currently managed by Fiserv.
“At the same time we are doing the core conversion, we are also implementing Finastra’s MortgageBot,” White said. The credit union will also adopt Finastra’s Fusion ECM, Fusion Originate, Fusion Analytics and Fusion Treasury Essential. But what made Finastra a compelling partner was its ability to seamlessly interface with disparate third-party plug-ins.
“The core has an open API architecture that will allow us to plug-in other apps. That is one of the reasons we chose this vendor. We didn’t want to be dependent on the vendor for new products and application integration,” White said, adding that 24 of its 338 employees are technology facing.
“Almost the entire IT department is involved in this project – engineering, data analytics, product development and member experience. We have a team of developers that can do this work,” she said. “We also have representation from all the business organizations.”
Same Game Different Player
In March 2021, Finastra announced that over a period of one year it had migrated 62 credit unions and community banks on its Fusion Phoenix core banking system to the cloud-based Microsoft Azure. This is a bellwether that an increasing number of financial institutions are looking for different core options, explained Finastra’s Vice President Retail, Community Markets John Weinkowitz.
“Cloud technology is a big enabler for financial institutions, particularly smaller ones, as it provides a low-cost path for innovation and open banking, leveling the playing field for them to compete with the large banks and non-bank fintech,” Weinkowitz said in a released statement. “This initiative also enables Finastra to run large financial institutions on the Fusion Phoenix platform and will provide many other benefits to our existing customers, such as improved availability, security and system monitoring.”
Finastra’s Senior Vice President and General Manger of Americas Field Operations Chris Zingo explained that with Fusion Phoenix, Workers Credit Union will experience “increased speed to innovation.”
While conceding that the decision to switch core vendors is no easy task, Zingo noted that Finastra was able to “provide both near and long-term benefits for Workers Credit Union and its members,” which, he said, made the choice “much simpler.”
Fusion Phoenix, he explained, was built on “intuitive” Microsoft-based architecture and its embedded workflow manager that allows common tasks and processes to be defined and automated.
“Finastra was also able to demonstrate that the migration to its solutions would establish a predictable cost structure for the credit union and allow it to grow its membership without incurring additional costs,” Zingo said. “By adding other products from Finastra — addressing lending mortgage and treasury needs — Workers Credit Union isn’t only acquiring a suite of fully-integrated, best-of-breed solutions, but is also positioning itself to expand into new lines of business and realize new revenue streams.”
As Workers Credit Union works toward the launch of Fusion Phoenix, White said there is still a considerable amount of work to be done.
“Right now, we are working with a team from Finastra. Once the system is implemented, that team will stay with us for a period of time after we go live,” she noted. “After that we will be assigned a customer success manager, who will do monthly account reviews, quarterly business reviews, and weekly support check-ins. Finastra will provide technical support as needed through a ticketing system.
Core Lessons Learned
As White looks back over the last 18-plus months, and to the year ahead, she has advice for other credit union executives looking to undertake the daunting task up switching a core provider. Among her suggestions is the importance of hiring of an outside manager to see the project through to fruition.
“There are several smaller projects involved with the conversion and this person will help ensure all projects are managed in a timely manner as well as support the credit union staff,” she said.
“It’s important to have a good idea of everything that is involved in the implementation, network changes, third party vendor integrations (both cost and time requirements), and data issues,” she continued. “Up to that point you are more interested in features and functions of the new core and while you think you know everything that is involved, it isn’t until you get to the implementation planning phase that you see all the tasks that have to be done.”
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