Plus, its current system is 20 years old and still based on Windows XP. That led the credit union to search for a partner that could help.

“We had an internal steering committee that evaluated several different consulting groups and people with expertise in that area,” Buxton said.

After several months of presentations and evaluations, the core project officially kicked off in January with the selection of the Chino Hills, Calif.-based Samaha & Associates to help with analysis, planning, implementation and documentation.

“From our perspective, we see these as organization projects, not just IT projects,” Samaha & Associates Managing Consultant Adam Denbo explained.

After selecting Samaha & Associates, the credit union's small internal steering committee was expanded to include employees from all departments, especially as it started bringing core providers onsite, Buxton explained.

“When we have our kickoff meetings, we meet with all the different teams,” Denbo said.

The goal of those meetings is for the core provider to understand the credit union.

“We know the core systems out there in the marketplace, we know the credit unions really well, but we didn't know Black Hills Federal Credit Union,” Denbo added.

Samaha & Associates spent several days onsite learning about the credit union's different teams and traveling to different locations to understand the various aspects of BHFCU.

The next step – producing a request for a proposal – was a collaborative effort from the beginning.

“Unlike some other consulting firms, we like to start off with a blank sheet of paper and have the credit unions author their own questions,” Denbo said.

During the kickoff meetings, Samaha & Associates gave the various departments homework.

Since they are member-facing, BHFCU's online and mobile banking platforms will be converted onto the new system first.

“We found out how they would ask questions in an open-ended way to various core processors,” he said. “That is how they start to compile a list of questions to ask.”

Buxton added, “It's really hard to get an organization to write an RFP. That is why one person or one small group ends up doing it, but that's not the case here. Samaha has a really good process for helping credit unions write an RFP. As the departments explained their pain points, we would capture them.”

The RFP template evolved to include examples of items captured during the interview process and questions from the participants.

“We created a website that allowed the different departments to enter their own questions,” Denbo noted. “Then we rewarded them with our master set of questions. Folks that have been on the same system for a while do not know what they do not know. But we do want them to begin to author their own questions. That customizes the RFP process to fulfill the specific needs of Black Hills Federal Credit Union.”

Buxton added, “It truly was an organization-wide initiative to write the RFP.”

The credit union sent out the RFP to three core providers. It takes some time for vendors to answer the RFP – Samaha & Associates allocates about three to four weeks for the response.

“In this case it might have been closer to five weeks,” Denbo recalled. “It is something that adds a lot of value because it is Black Hills' custom RFP.”

Denbo also pointed out participants from the credit union are more excited and engaged when reading these vendor responses because they addressed their unique questions.

Next, the team set up meetings with each vendor.

“We call them interviews, unlike a demo where you sit back and grab a Coke and popcorn and just listen,” Denbo said.

Samaha & Associates took the RFP responses, combined them into one document and redistributed them to the departments that created them. BHFCU personnel then highlighted and notated them. Then, the core team asked vendors to elaborate on and conduct demonstrations related to issues, questions and concerns when they come onsite.

“Then it becomes more dynamic – it is an interview, not a demo,” Denbo said.

In addition to conducting interviews, Samaha & Associates demands vendors set up a lab at the credit union.

“[That's] so the credit union team uses more of their senses: They are authoring the questions, writing notes, reading responses and talking collaboratively during the interview and watching process, and then there is the hands-on portion,” Denbo said.

Different departments cycle through the interview process and lab, which is located in a neighboring room.

During the interview process, the team looks for likes and dislikes for each core system as well as functions or features that each credit union department needs.

In addition to conducting a core search, Buxton said BHFCU is evaluating some of its key ancillary systems.

“We are not just reviewing core, we are also repeating that same process with some other systems such as mortgage, consumer lending, and online and mobile banking,” he said. “That is a little bit different; a lot of organizations just go through just a core selection, but this is really much more than that. We have several other selections going on in parallel to the core.”

He added, “As part of the core process, we identified every single system that we have – every vendor we currently contract with and every third party.”

Denbo pointed out that because third-party core providers are involved, gaps are going to exist.

“To fill those gaps, we work closely with the client,” he said. “We are bringing in commercial business underwriting systems that can plug and play nicely with any of the cores we decide on.”

Another thing that makes BHFCU's core conversion process unique is its range of product offerings: Investment and insurance products, business lending (agricultural and commercial) and mortgages.

Some services are further along in the conversion process. For example, while BHFCU has not yet made a final selection for a new online and mobile banking system, it is currently in the negotiation and finalization phase.

Part of the reason for proceeding more quickly on the online and mobile banking side is because it is member-facing.

“With the core, the members don't interact with that directly.” Buxton said. “Our thought there is we can complete the selection, make that conversion and get that all done before we do the core conversion.”

As far as the core itself, the credit union is currently in the interview, and hands-on evaluation phase. It has completed one vendor interview and has two more scheduled for early June. The interviews span three days, and separate mortgage loan origination system vendor meetings will take place as well.

After the interview process concludes, the team will conduct a gap analysis and scorecard procedure.

“They will be completing the scorecard, which they work with throughout the process,” Denbo said. “It creates more objectivity throughout the process, which would otherwise be subjective. The scorecard with the gap analysis and references really gives us insight into the direction the credit union team wants to go.”

Denbo pointed out, “It is always their choice, we're completely vendor neutral. We are just facilitating the process.”

By the end of this month, the credit union team will have a clearer vision depending on what the scorecard shows, Denbo explained. If the scorecard shows one vendor at 100 basis points or more ahead, then the choice will be clear. If the score is close, the credit union might rely more on internal gaps or price, or schedule onsite visits with neighboring credit unions.

Samaha & Associates sometimes uses another credit union as a reference to uncover how it managed to close gaps that another credit union (in this case, BHFCU) found.

By the end of June, the credit union expects to have more information to help it determine how to proceed. Then, it expects to begin a negotiation process, validation of the system gaps and follow-up on the gaps, and depending on the scoring, a final decision. Implementation will follow.

Learn about BHFCU's next steps in the core conversion process in an upcoming print issue of CU Times.