CMS Case Study

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Ensure Successful Integration of New Core

Employee Buy-In: Acceptance and embracement of the new core is a must. Executive management must unambiguously communicate that the change is both necessary and critical. In order to encourage buy-in and draw attention to achievements, milestones in the conversion process should be celebrated such as a) contract signing, b) one-year pre conversion, c) training, and d) the go-live date. Clean Up: Dedicate multiple people to the clean-up of the bank’s current core system. Duplicate or inaccurate records should be scrubbed before the conversion occurs. Train, Train, Train: Certain individuals will comprise an Implementation Team and will be designated to oversee training in a given area of the bank; ensure that these individuals receive the training and support they need to then train the people in their areas. Sufficient training materials, methodology, tutorials, and time must be provided, and employees should be encouraged to avail themselves of these resources. System reviews will be built into the core contract to ensure the bank is fully utilizing the system; the reviews should guide course corrections where necessary and steer resources to areas or employees that need additional training. 3. Reduce Efficiency Ratio to 55-60% We must maximize the productivity of our employees to achieve an efficiency ratio between 55% and 60%. Metrics and benchmarks for production within the industry should be obtained and the same compared to the corresponding positions within our bank to determine if changes to accountability, communication around expectations, and/or processes need to be made to increase productivity. Non-interest income and fee generation should be emphasized. Branches and employees should only waive fees where it is critical for a relationship with a customer. Our fee structure should be studied to determine if it is in-line with banks similar to us. Our treasury management and mortgage departments should be given ample marketing resources to promote these areas of the bank. Non-interest expense management should be emphasized as well. When an employee leaves, the bank should pause its hiring process and perform an assessment of our existing employees. Are there current employees who can be moved into the open position? 4. Do Not Sacrifice Asset Quality Being efficient includes maximizing revenue sources and minimizing expense sources on our income statement. While reducing non-interest expenses in an effort to be efficient is straightforward, oftentimes our loan loss provision expense is overlooked. It is critical to becoming efficient that we maintain sound asset quality: deviation from this policy creates unnecessary risk which leads to increase provision expense which leads to reduced efficiency. Every lender should provide a report to the Senior Lender at least monthly summarizing his/her proactive efforts to a) manage the condition of their portfolio and b) stay in contact with their largest borrowers.

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