How do you know when it's time to bite the bullet and commit to a data processing conversion? While the specifics may vary by credit union, in general, the answer is when your old data processing system no longer does what you need it to.
Take stock of your current system
Before deciding that your old system will no longer cut it, you should first make sure this is actually the case. Talking things over with your current processor before switching can save you a lot of money and heartache. It's easy to lose track of every single enhancement from every single release over a period of years or decades. By reviewing your processor's functionality, you may find it already added a feature you so desperately need – and thought you didn't have. In short, make sure you understand exactly what you have now before you decide to go shopping.
Should you use a consultant?
Many credit unions want to know if they should use a consultant to help with the conversion. To paraphrase Donald Trump, if you need to hire a consultant, you don't really know your business that well. On the other hand, you'll likely only have to deal with one data processing conversion in your entire career, whereas consultants deal with multiple core selections on a regular basis.
Your decision here depends on your comfort level. If you honestly feel that your staff has the skill and experience to manage the entire selection process – including generating an adequate RFP – you can safely skip the expense of a consultant. On the flip side, if you have any doubts about whether you can handle things yourself, invest in an expert. This is one time you can't afford to make even the slightest mistake.
Big and old, or small and agile
In general, you have two options for buying a new data processing system:
- One based on older technology from a large company (how old varies from system to system)
- One based on new technology from a smaller company
Let's address the technology first.
Most people agree that older legacy systems are more battle-hardened. They're typically very feature-rich because they've had decades to accumulate those features. And one school of thought argues that if the system does what you need, it shouldn't matter what type of technology drives it.
Yet technology does advance exponentially over time. That means that today's data processing technology is moving away from yesterday's at a faster and faster rate – which could lead one to conclude that soon, it will become difficult to integrate new technology into those legacy systems.
If you choose one of the 800-pound gorillas of credit union technology, you'll get a system backed by a financially stable company. You'll also have the option to purchase a range of integrated ancillary products to go along with your new core platform.
With a smaller company, you may be more wary of their financial strength, but you'll also more likely have a real voice in future development. And while these companies may offer very few of their own ancillary products, thanks to their newer technology, it will be easier to integrate the third-party products you actually want.
Each credit union has unique data processing needs, as well as different tolerances for risk. Just be sure to make the decisions that are right for you credit union – not the credit union down the street.
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