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Core System Conversions Are Like NASA Spacecraft Launches, But 'More'

What I mean by "more" is that just in the past five years, U.S. banks performed 2,890 vendor-assisted, core conversions as a result of switches to a new core system. Add to that the conversions at 1,877 banks in the same period as a result of bank consolidations, and you've got 4,767 conversions going on at banks, thrifts and credit unions. So 29 percent of all financial institutions went through a conversion in the past five years. That work represents one huge consumption of pain relievers.

What I mean by "more" is that just in the past five years, U.S. banks performed 2,890 vendor-assisted, core conversions as a result of switches to a new core system. Add to that the conversions at 1,877 banks in the same period as a result of bank consolidations, and you've got 4,767 conversions going on at banks, thrifts and credit unions. So 29 percent of all financial institutions went through a conversion in the past five years. That work represents one huge consumption of pain relievers.I don't know how many launches NASA executed in the past five years, but even if it were one per month, 60 is not in the same league as 4,767.

Bank core systems conversions are not exactly rocket science, but one bad "O ring" in the bank control record, and a few million incorrect interest accruals (in favor of the bank, of course) will irritate thousands of bank customers. That's what I call a disastrous core system conversion.

We don't see disastrous core systems conversions anymore, and that doesn't surprise me. Maybe it's because "practice makes perfect," but there's more to it than that. Here are the essential pieces of a conversion project:

1. A strong project manager, including a backup. 2. Planning, planning and more planning. 3. User department representation (all departments). 4. Customer service department representation. 5. IT department representation. 6. Audit department representation. 7. Vendor conversion team representation . 8. The perfect Gantt chart designed for reality, not the CFO's go-live date. 9. A communications coordinator whose previous experience includes raising at least three boys who understood Mom's instructions. 10. The perfect bank CEO (aka Arbitrator). 11. Politically correct team candidates need not apply. 12. Ad hoc meetings as required. 13. Weekly meetings (all teams plus ANY bank employee with a gripe). 14. A four-person performance measurement team reporting to the Board (before, during, after). 15. One outside super critic with solid conversion experience, no ax to grind, and isn't looking for a next assignment. That person also doesn't know the meaning of "slam dunk" or "piece of cake."

One look at the instruction manuals that good vendors provide, and the only thing left is to wish a colleague "Good Luck." But it's got nothing to do with luck; I prefer this well-intended expression: "Look For Trouble."

Note: Conversions data were taken from Exhibits 36 & 82 in Automation in Banking - 2009.

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