FCNB Creates Customer-Centric Organization With Core Replacement

After 15 years of fighting for market share in its Mason City, Iowa, home market, First Citizens National Bank (FCNB) was at a crossroads. "We grew by mining market share from the larger players," explains Gregg Maakestad, FCNB's SVP and CIO. "To maintain our head-to-head competitive status we needed to challenge and exceed their capabilities." But by 2009 FCNB's item processing and marketing customer information file (MCIF) solutions had become inadequate.

Rather than install point-solutions, FCNB, a subsidiary of First Citizens Financial Corp. ($1.1 billion in total assets) determined that a core systems modernization would provide capabilities beyond just meeting current needs, Maakestad relates. A long-time user of the Phoenix System from Lake Mary, Fla.-based Harland Financial Solutions, FCNB nonetheless conducted due diligence in early 2009. "With every contract cycle we look at all options," notes Maakestad.

"Because Harland is an open-systems vendor that shares all its database tables, we learned the strategic value of leveraging database tables," he adds. "Therefore, we evaluate vendors' willingness to share tables as a significant selection criterion."

In fact, using the tables has become a critical best practice at FCNB. "We use the tables to supplement vendor-supplied reporting and modeling," Maakestad explains. "For example, when Reg E [governing electronic fund transfers] was updated, ... we calculated the impact on our organization's revenue immediately. And we're doing the same now for the Durbin Amendment [regarding debit card fees]."

According to Maakestad, Harland's latest platform, the Microsoft (Redmond, Wash.) .NET-enabled PhoenixEFE Core, was the best solution for FCNB, leading to a late-2009 migration. "Beyond our existing hardware, PhoenixEFE only required setting up two production [IBM] XM servers and two for disaster recovery," Maakestad reports. "There were no show-stoppers in the new core system -- just some minor items [that Harland is improving]."

During 2010 FCNB added Harland's ActiveView Item Processing solution as well as the vendor's business intelligence tool, Touche Analyzer. And early this year the bank also integrated Touche Messenger, which draws intelligence from Analyzer for targeted multichannel marketing communications. The results have been impressive.

"PhoenixEFE has been key to achieving our current efficiency ratio of 47.5 percent," says Maakestad. "In addition, our item processing is simpler and our read rates have improved 15 percent. Also, the Touche solutions will be vital to moving our services per household from the current 3.493 to our 2011 goal of 3.516." The new platform also enabled FCNB to replace multiple daily ATM and debit card batch processes with near-real-time transactions.

And, over the next couple of years, the modern core will allow the bank to add more online and mobile products to its existing offerings. "As new opportunities mature, we'll jump into them with both feet," Maakestad says. "In short, our new core platform has made us more customer-centric and more efficient, positioning us for future growth."

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio