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Let's be frank: 2009 was not the year that most community banks undertook groundbreaking technology projects. Rather, projects that focused on increasing efficiency or wresting cost savings out of existing technologies and contracts found themselves at the top of most CIOs' to-do list.
March 1
The Fauquier Bank in Warrenton VA finished a core conversion six years ago after devoting much effort and resources. Bank executives then spent the next six years complaining about it. So when the bank choose to upgrade its core system in 2008 newly hired CIO Chip Register was determined the bank would not repeat that experience. He would be a tough negotiator, he would demand excellent execution, he would measure results post implementation, and he would deliver superior products and services at a lower cost. That's a tall order, but the $570 million bank managed to pull it off.
The project began with a careful half-year of due diligence. After that the bank committed $500,000 (17 percent of the IT budget) to convert from Metavante to Fiserv. To help keep the project on track and all sides communicating-and avoid the misunderstandings that inevitably delay a project and cause cost overruns-Register hired Harper McNeil, a consultant with core conversion expertise to work alongside the bank and Fiserv. It was this commitment to communication that kept the project on schedule, within budget, and relatively trouble free, he says. For instance, when the bank went live in June of 2009 it maintained uninterrupted EFT/ATM services, and successfully completed night processing the first night after conversion.
Equally impressive have been the cost savings and customer acquisition since going live. The six-year contract is worth $1.3 million per year and by switching core providers Register expected cost savings to total about $600,000 over the life of the contract. "We were very aggressive negotiators. The current environment gives us some leverage. And if you're moving from one vendor to another that clearly gives you another arrow in your quiver."
Indeed. After only six months the savings have exceeded expectations and may top $1 million. For instance, by reducing four image and document management systems to one Fiserv system the bank is saving $44,000 per year. Overall, in the seven months following conversion, core processing costs were running eight percent less than under the previous contract. The bank is also on target to increase its EFT/ATM income by five percent this year thanks to operational efficiencies, a better product suite, and better defined contractual relationships.
What's more, customers like the new experience. The number of online retail customers has grown 29.8 percent since implementation, while the number of business customers online has jumped a remarkable 48.2 percent. New products and new functionality are part of the allure. An enhanced ACH product that allows for more self service; a more efficient wire exchange product, and the introduction of BillPay from Checkfree have all resonated with customers. Christine Barry, a research director at Aite, says: "Fiserv has always been the 800 pound gorilla in the space. Bigger is often better since you've got a broader product line and so a bank has to manage fewer relationships."
Register has this bit of parting advice for fellow community bankers: "Small banks might not think they have the ability or edge to negotiate but I don't think that's the case."
