Your Sr. Management team has decided to migrate your bank or credit union from an In-house core, which resides on premise, to an outsourced core platform, which resides at your vendor. Your financial team has reviewed the total cost of ownership of both models.
They have decided that between the reduced risk and reduced staffing and hardware costs that they will experience under the outsourced model, they can make the higher vendor fees work. And so they are migrating to an outsourced environment.
You will now pay “per use” for your software, where previously you may have paid the core vendor through licensed tiers. There are a couple items to actively manage which could help you reduce your costs even further:
- Closed accounts
- Images in your image repository
Managing Closed Accounts
For the purpose of this discussion, we will use inactive credit union member accounts and closed bank accounts interchangeably. Most cores charge for closed accounts each month, since they have to process and balance these accounts each day alongside their open accounts. Large mainframe core programs spin through all accounts regardless of whether they are open or closed. And so, until you purge them, they will be counted and invoiced for.
Sometimes the bank or credit union team does not have the option to purge their inactive accounts during the fiscal year. If that is the case with your core, then at a minimum you should plan to purge the closed accounts prior to the migration from your In-house system. While they are still in your possession, you still have control over your purge.
Since many In-house systems carry closed accounts indefinitely, an initial purge of accounts that have been closed more than 12-18 months will save you from paying for unnecessary closed accounts in the first year.
Like closed accounts or inactive members, images are another area where, once you move to an outsourced or hosted model, you will likely have a “per image” or “per storage unit” cost to store the images. This is the vendor’s way to have you actively manage the amount of storage capacity needed to run your system within their facility.
Prior to your conversion, take out the trash. Remove the old signature cards, drivers licenses, mortgage documents, checks and statement images from previous customers that are no longer with you. Under the new CECL rules, longer retention may be required for the mortgage documents, but it is not an indefinite retention period, which may be the way it was treated when the system was within your walls.
Good luck with your migration! If you need any assistance in determining whether In-House our outsource is the right decision for your financial institution. keep Remedy Consulting in mind: