From opening and servicing loans to handling depository transactions to dozens of other critical functions, core systems perform operations vital to every financial institution. Yet, when it comes time to consider replacing their core system, many financial institutions are not sure where to start which can lead to trouble.

  1. Do you need to change?

Too often, institutions that are frustrated with their core systems start by asking which new system they should choose, when they should first be asking whether they need to replace their system at all. It is not unusual for an institution to have been running the same core system for many years. Over that time, your business will have changed. The core system should have been changing, as well. If system capabilities are not meeting your needs as well as in the past, it may be time to review the capabilities that are currently available. You may have needs now that you did not when the system was installed, but that the system is capable of addressing with proper upgrades, configuration and training of your personnel. Make sure that the business line subject matter experts, such as loan processing specialists and branch service specialists, are engaged in reviewing system capabilities so that they understand options and limitations, as well.

  1. Get the right help.

If you determine you do need a new core system, the selection process can be daunting. There are many options, but usually only a few of them are appropriate for any given institution. Unfortunately, the only core system you really know is likely the one you already have. Organizations often choose to work with a consultant to help make a more objective, informed selection.

If you choose to engage a consultant, you’ll want a consultant with broad experience in the financial institution industry who understands that there is no single best choice in the market. The consultant should start by working with you to define your precise business needs, and only then should they begin to match them with the capabilities of the various available systems. Your consultant will also need considerable knowledge of the vast landscape of specific solutions and applications available in the market and in use at your institution, as your core system will need to be integrated with dozens of those ancillary systems.

  1. Get it in writing.

Once you’ve identified the system that’s right for your institution, your consultant can play a key role in helping you negotiate a contract that effectively protects your organization and helps ensure that your vendor and your system follow through on their promises. A good consultant will understand that price is not the only object. The goal is an effective relationship between your organization and the system vendor.

  1. Get the most from your investment

When implementing your new system, don’t automatically configure it to replicate your existing processes. There are almost certainly opportunities to re-engineer your operations to more fully exploit the new system’s capabilities. Remember, you’re investing a lot of money, time and effort in choosing and installing a powerful tool. Limiting that new tool to your old tool’s role means wasting the chance to realize the return on your investment.

Having the right core system in place and taking full advantage of its capabilities is one way to succeed in them. Make that decision carefully, and with the right help.

To find out more about this or other ways that RSM can assist you with your business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.