This content was previously published in IB magazine.
Many community banks have been operating with their core technology for decades, often for as long as the bank has been established. The bank’s staff are accustomed to working with old technology and a mindset of, “if it’s not broken, don’t fix it.” But digging deeper, many bankers are finding that it is, in fact, broken in some way, shape, or form. Legacy core systems become stagnant, costly to maintain, and create a barrier to growth and profitability.
Community bankers must realize that the benefits of a new core outweigh the upfront costs. For community banks to thrive in this time, they must take the leap, let go of their incompatible core, and explore systems that can evolve as their needs change.
From Wishlist to Critical Need
The pandemic changed everything. Community banks that had placed a new core system on their wish list were suddenly making it a priority. Banks found themselves relying on their technology more than ever before to serve their immediate needs, especially in fulfilling customer demand for new bank services and managing PPP loans.
If new products and services weren’t available with their technology, bankers started asking their core vendor questions related to integrations, adding on new products and services, and delivery times. The hard truth is that with legacy systems, the chances of delivering new products or updating existing applications are slim, and often puts community bankers at risk of becoming noncompliant and losing their current customers when they’re unable to meet the demand. Consequently, bankers are caught in a sticky situation: deciding between operating a legacy system that everyone is used to, but yields no positive outcomes, or investing in new technology that adapts to changes in the industry and supports a bank’s growth.
"The pandemic has really tested the longevity of legacy core systems. Bankers are realizing that they are paying more than what they are getting. Customers are requesting for more technology options. Bankers are, in turn, asking their core vendor for system enhancements and integrations to meet customer demand and to help streamline bank operations. But, with a legacy core system, you’re just not able to get that flexibility. And, if they can oblige, the turnaround times and costs are absolutely ridiculous.”
Mark Dittman, Chief Executive Office, IBT Apps
A Hybrid Approach to Selecting a New System
Legacy systems don’t have the agile infrastructure in place to continue developing and creating the products and services bankers need to grow their business. When deciding on which technology is the right fit for your bank and which core partner will help enable future growth, consider the following characteristics that they should both possess:
Right Technology
- Adaptability: Constantly updating and enhancing to evolve technology and meet the needs of bankers, while offering them the ability to integrate different services of choice.
- Affordability: Provides cost-effective options to grow your business, without complex, long-term contracts and outrageous fees.
- Security: Meets the correct compliance and regulatory standards to ensure your bank has a secure environment.
Right Partner
- Technology Experts: Your technology partner should lighten the burden of managing technology, while staying current with technology advancements.
- Compliant: There are a multitude of best practices, rules, and regulations that community bankers need to know to keep their bank operations and technology compliant.
- Dedicated Support: Provides your bank with the proper training and ongoing support to continue serving your customers.
Learning to Let Go of Your Core
Bankers are craving a technology partner that makes things easier through the uncertainty of the pandemic. Community bankers need to be agile in their approach, agile in the services they offer with the ability to react to situations as they arise. Equally, a core provider should be adaptable with their offerings, serving as the technology expert in the partnership and easing the technology load on the community banker. Technology has evolved and if your core provider isn’t keeping up and only causing you more and more frustration, it’s time to let go.
If you’re beginning to look at new core providers, we at IBT Apps would love to connect with you.
