Dan Fisher

With over 35 years in the financial industry, Dan M. Fisher has proven himself as a leader in the financial industry holding roles as the former director of the Federal Reserve Bank of Minneapolis and former Chairman of the ABA Payment Committee.

The Shift is Staggering

When we started the Copper River Group in 2005, the trend of financial institutions leaving their incumbent processor for core processing was 1 out of 5. This statistical experience continued in our core reviews until 2009 until we noticed a change, however subtle.

Today, the exact opposite is the norm. An eye popping 4 out of 5 institutions that contact us to help conduct a core review leave their incumbent processor. A staggering shift, but from our vantage point, not a surprise.

Looking back, most financial institution executives did not take much time to try and understand I.T. It was really a matter of the basic processing services being provided in the same way as everyone else. Since it was primarily operations and technology versus loans, they did not need to worry about.

Core conversions were primarily a result of the M&A activity, and the experience was horrific for both involved institutions. Vendors relied on the FI staff to do the heavy lifting, map the applications to each other, and connect the dots. The team, though hard working and dedicated, just did not have the knowledge, experience, or resources. Simply put, conversions were a major challenge.  

After the conversion, systems did not work, it took months to balance the institution and customers were adversely impacted due to everything going wrong. Months later, the institution would emerge from the cloud of dust, but the damage was already done, and customers were leaving in droves. Furthermore, the staff was worn out.

Trainwreck conversions were due to poor or no planning, lack of experience or no experience at all. Institution leadership made the critical error of assuming that operation and IT employees had plenty of extra time available to plan for a conversion! The technological Tsunami that created the massive negative perception about conversion was that few decision makers had little understanding of what it would take to produce a smooth and successful conversion, and it caught many institutions by surprise.

Consequently, financial institution executives would passionately resist any form of change to avoid a repeat of the past. Yes, it is true, no change is good. The prevailing management policy I encountered was resistant executives stating emphatically that they would retire before approving a core change. The only change would be one of last resort and not intentional.

At the root of the problem was a total lack of confidence in the ability of the staff and the available resources to facilitate a smooth transition. Of course, in the past, a minor software version update would crash the system, so who would blame them?

What has changed?

First, I would say that the market has changed, and technology is the point of the spear when it comes to competition. The status quo of the past is not acceptable. Junior executives that are more comfortable with technology and not afraid of it, are moving up into the executive suite. New vendors have listened to the horror stories told of the past and smoothed out the conversion process by doing most of the heavy lifting. After all, they are the Subject Matter Experts (SME) of their system not you.

Finally, institutions have lost confidence and trust in their incumber core vendor. This situation illustrated has become the central theme to any incumbent vendor departure strategy.

Warning Signs

We have observed a sequence of events that precede an institution ultimately deciding to leave their incumber processor.

Service Level Deterioration

First, service begins to deteriorate to a noticeable level that it impacts the first line customer (or member) more than once. Simple phone calls to customer service are returned slowly or if at all. Cases submitted on the client portal remain open for months or drop off because they have been on there too long. Explanations flow from the vendor that they are working on it, but progress or resolution is hard to see.

Another symptom is relationship managers being stretched to the limit by virtue of being assigned too many customers. We have seen the ratio of clients to one relationship manager as high as 35-1 which makes it impossible for one individual to properly care for the customer.

Poor or unsatisfactory service has evolved into a lower standard of care.

Loss of Confidence and Trust

Severe service interruptions are occurring more frequently. Credit unions and banks have experienced what was formerly rare now becoming a normal course of business.

The systems that are impacted most often are internet based services going offline for an extended period of time. Internet Banking, Mobile Banking and Mobile Capture (Business and Consumer) being the most common. In the context of the millennial customer this service is mission critical!

These service interruptions are not limited to internet services. Entire data centers, with little warning have failed and gone dark. To make matters worse, little or no communication from the vendor about the situation status is sent. Internally, daily updates not being processed correctly, files lost or erased causes a manual rebuild of the previous day’s transactions by the staff.

When access to basic system services becomes unavailable, or in a diminished state followed by no communication, the situation becomes dire and from the financial institution standpoint the vendor becomes unreliable.

Even though some of these vendors have provided detailed and elaborate explanations of what went wrong, it defies logic how a financial institution vendor got themselves into such a position. The explanation further identifies that bad management and poor planning of the vendor is widespread and conveys to the client that they remain at risk regarding continued and unexpected service interruptions. A.K.A., more to come!

Confidence and trust in the vendor has been lost and vendors are unable to restore that confidence with any creditability.


Innovation is the main ingredient to a thriving business model. To be out on the leading edge can present some challenges and it is understood that new products in the financial services space must undergo significant development and testing before being released.

The frustrating aspect of this process is your current suite of products most likely is far behind the marketplace. Your core vendor has been notoriously slow in improving integration and streamlining processes. When an institution asks where their core vendor is at in regard to their platform and product improvements, they are often presented with the corporate pipeline PowerPoint accompanied with the delivery promise that is never hit on time.

Being left behind or ignored

A good example is pertaining to how many institutions that are waiting for intelligent design internet based systems. Intelligent design internet systems have become the De Facto standard and have been for over 5 years. The vendor response, however, is that they are working on it. Institutions ask, how long do we have to wait?  Their answer is that they have already waited too long.

The Growing Snowball

With the increasing levels or poor customer service, combined with loss of confidence and the absence of competitive technology, institutions begin to start asking their colleagues and associations about their options. Soon, the institution decides to implement a formal technology or core review project. It is the only way they can develop an unbiased and informed view of where they are, and where they need to be.

The awakening!

Financial institution clients of vendors that have neglected a long-term relationship are in for an eye oping experience. Institution executives quickly realize that there are better products out there now, better service and better pricing. When assisted by a competent technology consulting firm, it becomes clear that they do not have to wait any longer or pay as much. Quickly, they conclude that it is easier to change and obtain what they need now, as opposed to continuing to endure the deaf ears and sub-standard service from their incumbent vendor.

Watch-out. When your long-term vendor is notified of your review project, they will send in the “Upset Customer Triage Team” to try and save the relationship.

They will ask, what will it take to save the relationship? Even though they promise huge discounts, the offer does not resolve the problem. Soon these institutions on the bubble will realize that even if they signed an extension based on their promises, that the same problems will still be there, and you will not have what you need to meet the demands of the customers.

It is sobering to see the contrast in attention that occurs when a vendor fears they are going to lose another one. It is enticing to enter into an updated contract and see an immediate savings, but then reality sets in.

Same bad service at a lower price that you are still paying too much for. Customers are tired of their financial institution being behind in the marketplace and start to leave. If employees see that you do not care about the service challenges of the daily situation, only the monthly cost – they start to leave, too.

When you add it up… institutions are leaving long term vendor relationships because they need to make a change for their customers/members, their employees, and their future.

Does this sound like your institution?

You have options!

Well, there is little comfort in knowing that you are not alone, but in today’s context, you do have choices. Perhaps it is time for your institution to survey the choices and selection one that works and ends the cycle of frustration.  

Bad changes happen through neglect and indifference. Good changes happen by making an informed decision and taking action.


Dan Fisher

With over 35 years in the financial industry, Dan M. Fisher has proven himself as a leader in the financial industry holding roles as the former director of the Federal Reserve Bank of Minneapolis and former Chairman of the ABA Payment Committee.

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The Copper River Group is a financial consulting firm that believes in the benefits technological advancement has for streamlining business.

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