Process Changes Essential to Core Conversion Planning

Editor’s note: Direct Federal Credit Union is a one-branch, $750 million credit union located in Needham, Mass. It is undergoing its first core conversion since 1984 and has partnered with CU Times to document its journey until the new core is anticipated go live in 2021. Contributing authors will be members of the project team and each article will tell a story from a different point of view. Read its debut article and continue to follow along at cutimes.com/instantinsights.

Welcome back to Direct Federal Credit Union’s Core Conversion Adventure. How many people reading this article would like to continue to be limited by technology developed in 1984 to drive their business procedures and workflows? I am certain the answer to that question is zero. Our first core conversion since 1984 will be instrumental to our business, and we have no option but to complete this conversion correctly. Any credit union that has been through a core conversion will agree that a key tenant of success is its team having the right mindset. A core conversion will force your credit union to examine every product, every service and every workflow that exists for the organization. That task may seem daunting, and it is. However, at Direct I am confident to say that our mindset of continuous improvement is ready for the challenge.

Let me take a step back and explain how Direct developed our continuous improvement mindset. Direct has spent the last few years adopting LEAN process improvement practices and focusing on our culture – two critical pieces of a successful core conversion. The creation and implementation of Team Lean, a working group of Direct employees responsible for upkeeping and teaching Lean Enterprise principles, has been one of the cornerstones for Direct’s growth and one of the main reasons we believe our conversion is set up for success.

At Direct, every employee understands member value and focuses their processes to continuously improve it. To promote this methodology, Direct created the DirectThinker program. The DirectThinker app provides all employees with the opportunity to submit their ideas for continuous improvement. With Team Lean and Direct Thinker, we have empowered every single employee to ask, “Why are we doing this process, and does it make sense to continue to do it that way?”

The results have been tremendously successful. Our employees have submitted over 344 ideas in the past three years, and to date we have been able to implement 170 of those suggestions. One constant roadblock to the implementation of any number of these ideas is an outdated core system. With the conversion underway, we are anxious to remove our final roadblock to prolonged, continuous improvement.

In order to organize the work and responsibilities of the core conversion, Direct formed 10 Conversion Action Teams (CATs). The 10 CATs are: Accounting, Deposit Operations, Loan Origination Systems, Mortgage and Servicing, Loan Servicing, IT, Member Services, Digital Banking, Card Conversion and Commercial Banking.

One of the first projects the CAT teams completed was designing System Schematics. The System Schematics are diagrams of how our third-party vendors will interface with our new core system. This visual management tool allowed our CATs to show the true scope of the conversion work. After the system schematics were finished, the CATs hung them in our lunchroom for all Direct employees to see what we are taking on.

In the next phase of the conversion work, the CATs will examine their respective workflows and standard work procedures. This process will be completed in conjunction with learning how our new core system, Corelation Keystone, and digital banking provider, Alkami, provides for new service opportunities. Direct’s CATs understand that our current processes for day to day work need to change so we can take full advantage of the conversion. In the true spirit of continuous improvement, I can say with 100% confidence that very few of our standard procedures and workflows will be the same today as they will be when we go live on Feb. 1, 2021.

As the leader of Team Lean, I firmly believe “that’s the way we’ve always done it” equals the most dangerous phrase in business, period. The pace of change in financial services demands that Direct, and all credit unions, be able to serve our members where and how they want to be served. Our continuous improvement mindset and new technology will allow us to continue to innovate old ways of doing business and remove friction from our members’ financial lives.

I have to run to another CAT meeting now, but our team will be back next month with another article focused on how our Project Management office is providing structure and guidance on how to best tackle a massive project plan spread across 10 different teams, two different system vendors each with their own project management team, and a consultant.

Devon Lyon is Vice President, Strategic Research & Risk Management for Direct FCU in Needham, Mass. He can be reached at 781-855-7489.