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Transforming Banking Core Systems: Lessons from Busey Bank

Busey Bank moved its core systems into the cloud, creating efficiencies and preparing for growth. Here's what banks can learn from Busey's conversion.

A core systems transformation is perhaps the biggest technology project a bank can undertake. Core systems do more than just run the business; many banks are replacing legacy systems with newer ones in order to provide better, more tailored customer service and become more efficient.

There are many factors a bank must consider when looking at replacing or upgrading its core systems -- the cost for one, and also whether to do a wholesale replacement or take a piecemeal approach. In addition, there is also the option to take all the core systems into the cloud. But perhaps the most important factor in a successful core conversion is having a top-down commitment to the project.

That's what Busey Bank ($3.6 billion in assets) found when it recently moved its core systems into the cloud to meet its growing business needs and increased compliance requirements, says executive VP and CIO Leanne Kopischke. "The buy-in across the company is the biggest part, and the understanding that it's a significant change, for front-line associates especially," she says. "A big part of it is how well the organization is committed to the change."

Kopischke began her banking career as a teller during high school before joining Champaign, Ill.-based Busey in 1993. She progressed through various operations and management positions until being appointed executive VP and CIO three years ago. Kopischke has seen a lot of changes during her time at Busey and says the key to dealing with a major transformation, such as a core conversion, is to involve everyone in the company.

Busey Bank is a subsidiary of First Busey Corp., which also owns a wealth management company and has a payment processing arm, FirsTech Inc. Busey Bank is First Busey's retail and commercial bank subsidiary, operating 30 full-service and two limited-service branches in Illinois, a full-service branch in Indianapolis and seven locations in southwest Florida. It also specializes in agricultural financial and farm brokerage services, which have been a part of Busey's business since it was founded in 1868.

In 2007, Busey merged with Florida-based Main Street Bank & Trust, expanding the bank's footprint and nearly doubling its size with a combined total of 1,000 employees. The merger got the bank talking about how it could better run its operations and serve its customers, a discussion that ultimately led to the need for a core transformation, Kopischke says.

Busey wasn't alone in rethinking its core systems after a merger. Banking is seeing a resurgence of core conversions following a downturn after the financial crisis, says Karen Massey, an IDC Financial Insights analyst. "We kind of peaked in the core replacement area in '07-'08, and then the numbers went down in '09," Massey says. "And now they're coming back, though not at the same pace as 2007."

One reason for this uptick is the increase in M&A activity in the banking industry, she says. As banks grow, they make new and different demands on their core systems.

In Search Of A Partner

Busey decided to unify and strengthen its tech infrastructure three years ago. It wasn't just looking to improve its core processing but also wanted a technology partner to work with as it continued to grow, Kopischke says.

Busey didn't conduct a formal RFP process, she says, but instead spent a year meeting with industry experts, gathering feedback from its employees and exploring a multitude of systems. The bank eventually asked two companies to host product fairs and demo their systems. Computer Services Inc. (CSI) was the one that best met Busey's needs and organizational goals, Kopischke says. Busey employees who used the Paducah, Ky., vendor's system found it to be the most user-friendly, she adds.

CSI's NuPoint cloud-based core platform had the flexibility, customizability and ease-of-use features that Busey needed, she says. For example, its Smart Branch Delivery system, which is hosted at CSI's headquarters, lets Busey configure, maintain, update and deploy new branch capture programs without requiring a physical site visit.

The cloud-based core also eliminated the hardware and software investments required with in-house systems, Kopischke says. In addition, since the Main Street Bank & Trust merger, Busey faced growing compliance demands that its existing infrastructure wasn't equipped to handle. CSI offered several products, including its WatchDOG CIP software, that help Busey better comply with the Patriot Act, the Red Flags Rule and other federal laws and regulations related to fraud, identity theft, criminal activity and terrorist financing. Busey also is using CSI's WatchDOG Pro, a Web-based tool that screens customers against U.S. and international watch lists.

Hosted core systems, like the CSI ones Busey is using, are attractive to small to medium-sized banks since they mean "somebody else can take care of the nuts and bolts," IDC's Massey says, especially when it comes to helping them deal with compliance issues. Hosted systems usually provide cost savings as well, she adds.

Big Bang Approach

Busey signed its contract with CSI in May of last year, four months before the contract with its existing core provider ended on Sept. 14. (Kopischke declined to identify the bank's previous core systems provider.) Busey and CSI decided to take a "big bang" approach to the conversion, doing it all at once on the weekend of Sept. 14, rather than taking a phased approach. This was feasible, Kopischke says, because CSI and Busey worked closely in the months leading up the conversion to prepare everything.

In preparation for the conversion, the two companies embarked on intensive training of more than 900 bank employees, including its tellers who had to learn to work with a new interface. CSI provided e-learning modules for Busey employees to practice how various programs and systems would operate under the new core systems. CSI did the training on site at Busey; it also had employees on site to test every aspect of the integration, Kopischke says.

"We established work teams across all of our lines of business," she says. "From our operations managers to people who work on the front line, every part of the company was involved in this process. ... It was a full commitment from all lines of business."

CSI employees also formed teams that focused on moving the bank's data between cores in segments, says Bob Ezell, CSI's VP of product management. CSI and Busey managers met weekly to review progress and solve problems, providing communication that was key to the core conversion's success, Ezell says.

Not only was internal communication important, but communication with the bank's customers also was critical. The bank sent customers mailings explaining the conversion and provided updates on its website, Kopischke says. A single associate from the bank's communications group was responsible for the customer communication.

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On the weekend of the conversion, 100 CSI representatives were at Busey's headquarters, and a CSI employee was at each of the bank's branches. The bank shut down the Saturday of the changeover while everything switched to the new core, and the core data came back up on Sunday. "We knew when our downtime would be and when everything would come back up, so we were prepared," Kopischke says.

The switchover went smoothly, she says, and the few issues that came up were solved quickly. As with all large, complex transitions, it wasn't perfect. CSI and the bank could have done a better job understanding how the transition would affect back-office processes, she says.

Busey's customers largely didn't experience any problem. "There were no major customer impact issues that caused havoc," and feedback from customers and associates alike has been positive, Kopischke says.

About six months after the conversion, the bank is still measuring the full effect of the switch, but it already has noticed efficiencies. For example, the delivery of new products is much quicker, Kopischke says, and Busey is able to respond faster to technological issues that arise.

Ultimately, though, Kopischke admits the four-month timeline to complete the project "was a little short" but the close partnership between Busey and CSI enabled the conversion to be successful nonetheless. "We did a really good job with it," she says.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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