Why I Became a Core Systems Renegade

Most banking providers know they need to dump their legacy core system. But pick the wrong replacement, and you're no better off. Here's why we shirked convention, shunned the predictable players, and went rogue.

Every financial institution is unique, with its own constituencies that each require a unique combination of products and services – precisely why many out-of-the-box core systems don’t fit everyone’s needs.

Such was the case at CHROME.
When I arrived in 2010, I inherited a core system that was under contract – a stable product, and deserving of its popular standing in the market. However, it’s not the best choice for smaller institutions like ours ($88 million in assets when I came aboard), especially since we have committed to becoming more and more nimble, and extremely aggressive with our strategies involving tech. Sure, a big institution with a team of programmers can make that particular system sing, but not us.

Three years ago when I became the credit union’s CEO, our forward-thinking board quickly agreed that we needed to embrace a digital model. To achieve that goal, we would require rapid response integration; we needed to be able to add new products and services quickly, as our business model evolved and expanded. It soon became clear that our service bureau solution with a 30-year-old core wasn’t going to cut it. At least not any time soon – definitely not soon enough.

So we went core shopping. Of course we looked at all the major players, but we came away feeling the same about those options as we did about our current core. We also considered several smaller core providers that were great… but fell short of our expectations when it came to things like API-based integration. Plus, none of them seemed designed for slicing and dicing all of the data from all our different data streams – core, third-party products, or wherever. Even though many of them boasted “open integration,” they were using an outdated definition of what that means.

Digital to The Core

We believe banking evolution will center around direct digital marketing. The only way to get there is to have a core that protects the member’s data while also allowing it to flow freely and securely across all the third-party products we need to deploy, and lets you look at that data from any angle you want.

Did I mention that we need all that to happen in real time? Apparently that was a much taller order than I would have ever expected.

Just as my frustrations were reaching a white hot crescendo, we learned about a new tech company that formally launched its core at Money20/20 two years ago. A few months later, I asked for a demo, met with their executives, and soon began due diligence.

Now, this firm wasn’t very well known in the banking world yet. But they already had a full relational data model organized around individual relationships (people or businesses), and provided a 360-degree view. The platform came with a full-stack banking solution – internet banking, voice response, mobile banking, data warehousing, and imaging all built into the engine – so we wouldn’t be patching a bunch of products together with bandaids. It also came with a pretty slick interface, including a user-friendly automated workflow design, which is precisely what we wanted: a system designed by people who cared about about UX, because most (if not all) banking core systems were designed by programmers – engineers and techs who don’t necessarily put the customer experience first.

For all the bells and whistles, we ultimately chose to go rogue and picked our new core system provider because we felt their platform could successfully adapt in real time, which we knew would be critical to our strategic goals.

For instance, we are gearing up to add our PFM partner’s business platform as part of our overall commitment to community businesses, which is something they will be able to fully integrate in a 90-day window. Our old core couldn’t even come close to that, even though they have an agreement in place with the PFM company.

Here’s another example. On the old core, we decided to move to a virtual desktop infrastructure (VDI) environment using Citrix because we wanted to eliminate core client software on employee workstations. We eventually got it to work, but the implementation was clunky and ugly. On the other hand, our new core provider is already completely browser-based and runs from the cloud. Having a cloud-based, IP-locked, geofenced solution means that we can literally run everything off a $200 laptop. With a VPN in place, we can do it from anywhere, too. Our specific plan is to build our whole infrastructure from HP Chromebooks and Chromeboxes, with the occasional Windows PC or Mac as needed.

We’re also going work with our new core provider to develop a mobile platform that works exactly the way we want it. We also have a couple other innovative product offerings we want to roll out in the near future, and we know it won’t take 24-36 months like it might with older cores.

Yesterday’s financial institutions relied heavily on legacy tech technology. Tomorrow’s banking providers will be tech-driven, digital-first organizations that just happen to specialize in delivering financial services.

Christopher George is the President and CEO of CHROME Federal Credit Union in Pennsylvania. You can reach him at 724-503-8744 or send him an email.

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