Welcome to the second episode of Fintech Whiteboard with John Best! This week, join John in part 1 of a 3 part series on what you should know before agreeing to a conversion at your financial institution.
Fintech Whiteboard Episode 2: Stuff You Should Know Before Agreeing to a Conversion Part 1
Welcome everyone, to this edition of Fintech Whiteboard, and this week’s episode is about conversions. I want to talk about some things you should know before you do a conversion.
Kinds of Conversions
The first thing is, what kind of conversion am I talking about? Because there are lots of different kinds. The kinds of conversions that I’m always thinking of are first are the ones that are the most impactful. The first type I think of is the core. The core is kind of your main database, so in credit union land, this could be Symitar, it could be DNA, it could be a lot of different products.
The next one I always think of is your home banking. Home banking, mobile, your digital products, things like that. Sometimes, this can even include your BillPay product, if you’ve got a BillPay system. Then other ones I think about are credit cards, and those are, I don’t think, as difficult conversions as the other ones, but certainly something to consider. These are probably the four major types of conversions that I think about when I talk about conversions with people.
Let’s Start Off With Stuff You Should Know
The first thing that you should know before you start a conversion is, no matter what, you are going to lose six to nine months of productivity, depending on which one of these you choose. What that means is that people who have day jobs that were working on other things are going to be focused on this conversion. That’s important to understand because you must factor this into the life span of what you’re doing and whether it’s worth it. So, knowing that you’re going to lose six to nine months, even a year, if it’s a core product or it’s a big enough change.
The second thing you should know is that probably when you get this new system up, it’s not going to have all these new things that you chose it for. As a matter of fact, most of the time, it’s just going to be parity, which means it will do all the same things the old system does. And that’s difficult because you just put people through a big bunch of work, and it just does what the old one does, so you must think about that.
Good Reasons To Convert
I talk to people all the time about why they should convert, and here are things that I think are good reasons.
#1: If your vendor is bad at service and your service is just horrible. Certainly, that’s a reason to convert.
#2: If the vendor or the company has either abandoned the product or is going out of business, absolutely, you should convert, without a doubt.
#3: If they are incompetent, and we’ll talk about this in the next part of this, but if they are incompetent, then absolutely, you should consider converting, meaning that they’re not moving forward in the industry.
#4: If they have stopped supporting or have gone stagnant in terms of their support and what they’re doing with the platform, then absolutely, you should consider converting.
#5: If they have a lack of new features, or they’re not open enough for you to add new features, and that is inhibiting your business, certainly, you should convert.
#6: The biggest one that I hear a lot, is cost. This is one that people talk about a lot when they’re talking about converting. They say, “Yep! This is one of our number one reasons!”
Some Bad Reasons To Convert
Some of these are going to be similar. These are things I hear from people as I’m floating around, talking to people about this, and as we do this type of work for people.
#1: It just does not do X, and if it did X, that would be great. And I don’t think anybody out there is converting over one feature, but even four or five might be a bit much.
#2: Everyone else is converting to X, and so we feel like if we don’t convert to X, that we’re going to be missing out, and we’re going to be lacking in the market.
#3: Look and feel. “It just looks old to me. “It doesn’t look new enough.” There are a lot of things you can do about this.
#4: personality differences. “Well, we really just don’t get along with our account executive.”
#5: “Well, their technology doesn’t fit with what we’re doing.” So, their platform, or even their infrastructure, or even the type of technology, whether it be Microsoft or Linux, it just doesn’t hit.
#6: Cost. And you’ll notice that cost is in both lists. Let’s talk about why that is. So why would we have cost in both the good and bad? Cost in the digital space, particularly in the core or in credit cards, or any of these solutions that require a large conversion, is not something that’s easily quantifiable. The duplication here is because, are you sure? This reason over here, obviously, is always it costs too much. And then what happens is I find that an organization converts to the new solution, and they find that, yeah, it was a lot cheaper, but they need more full-time employees to operate it.
I also find that there are people who convert for a good reason. They convert because they feel like they’re overpaying for the same exact feature or the same exact service, only to find out that they didn’t do their homework, and that really, they were failing at vendor management. That’s something that I find is rampant, and unfortunately, the problem with understanding that you are failing at vendor management is you only find this out after you’ve done two X conversions, and you realize, hey, maybe the problem isn’t the vendor. Maybe it’s us. This is a tough thing to learn. When you’re looking at a conversion, you need to make sure that you are not failing at vendor management.
To be continued. Be sure to tune in next week for the second in this three-part series on conversions. Also, if you missed White Board #1-Data Analytics in a Nutshell, you can watch it or read the transcript here.
You can find me on LinkedIn if you just look up John Best. If you want to talk to me on Twitter, it’s @jbfintech. If you want to find me on email, it’s email@example.com. And if you’re an Instagram person, it’s johnbestofficial. I would love to hear from you.
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