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Maura Ammenhauser
Maura Ammenhauser
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New City Gets a Head Start

Community bank outsources core processing to CSI to launch operations in a crunch.

At a time when consolidation among big banks is grabbing headlines, smaller start-up banks don't get much attention - but they're still active. Consider New City Bank, which opened its doors on Chicago's famed Michigan Avenue last fall.

In its first six months, New City amassed 500 accounts, $23 million in assets and a strong working relationship with Computer Services Inc. (CSI), the data processing provider that performs nearly all of the bank's back-office work. You can't launch a brand-new bank in a highly competitive market without an adequate technology infrastructure, and Robert Franch, New City's president, says CSI met all of his bank's needs - speed being one of the biggest.

New City got state approval to organize last June; FDIC insurance was approved in late July. And bank executives wanted to be open for business by October, less than three months later, Franch says. CSI agreed to implement New City's back-office functions in 65 days, far faster than its competitors, which needed between 90 days and six months to complete the project, according to Franch.

Why would it take some vendors up to six months to implement the bank's data processing if CSI, headquartered in Paducah, Ky., could do it in roughly one-third the time? "My suspicion is [that] a lot of them don't want to devote the resources to doing it," Franch says.

"This is the fastest turn around time we had to get a new bank up and running," says CSI's regional vice president, Diane Tiemann. Like other vendors, CSI usually spends 90 to 120 days preparing a bank's core systems to go live.

Planning a bank launch requires ordering supplies that range from paper deposit slips to ATMs to debit cards, Tiemann points out, and often CSI is dependent on other suppliers to accomplish this, which requires relatively long lead times. This time, CSI was able to work with suppliers to get early delivery. "We had no mission-critical products which would delay a successful opening," Tiemann explains.

New City operates a single branch. It's primarily a commercial bank, Franch says, running its front-end business with CSI's Passport suite of products: Passport Platform sets up new accounts; Teller processes transactions; Passport Desktop offers online host inquiry, file maintenance and transaction software; and there's also a report-writing program.

Passport products integrate seamlessly with the back-office functions performed by CSI for New City, Tiemann asserts, including proof encoding, image capture, electronic and paper statements, ACH transactions and ATM operations. It's the integration between the front-end Passport software and the back-office core systems that sets CSI apart from competitors, she says.

New City considered systems from five vendors. Its executives chose CSI's solution because, "They're on the cutting edge of technology as far as banking goes," Franch explains. "They have user-friendly systems and their customer service was excellent. They offered us what we were looking for."

CSI has worked with about 60 new banks, so it understood the task at hand, Tiemann says. The outsourcing services provider has a basic implementation process for start-ups that it customizes to meet the needs of each, as it did with New City, she adds. Start-ups can be challenging, she acknowledges, but "we find de novos work real well with us."

This willingness to work with a new bank was a major factor in New City's selection of CSI, according to Franch. "It was the general attitude they had," he says, adding that "the cost was very enticing," too.

Neither Franch nor Tiemann would reveal the financial details of the five-year contract between the companies. But Tiemann explains that "CSI does not bundle its prices, which means that banks can turn on and off options and the bank pays for what it uses," she says. "It grows as they grow."

Snapshot

Institution: New City Bank (Chicago).

Assets: $23 million.

Business Challenge: Build new technology infrastructure and open branch in less than 90 days.

Solution: Outsource back-office processing to CSI (Paducah, Ky.).

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