Pub. 11 2021-2022 Issue 3

September • October 2021 19 The Ancillary Systems are key applications that surround and interact with the Core System. They include important services like ATM/EFT, Credit Card, Online Banking, Mobile Banking, Loan Origination & Servicing, Payments, Wire Transfer, Cash Management, Document Management, BSA/AML, IT Security, Check Processing, among others. These Ancillary Systems are as important as the Core System because they not only support the key business functions of the institution, but also serve as touchpoints for customers. We also see banks aggressively pursuing new strategies to expand and emphasize Digital Channels — many that shrewdly started such projects prior to the onset of the pandemic. In modernizing their Digital Channels, banks are not only reaching more customers, but they are also doing so with more innovative and integrated applications while potentially reducing data processing spend. Furthermore, they are making a sound investment in what will become a vital channel through which customers will be served in the future. Banks are also making changes to the Digital Channel to address a shifting mix of commercial or consumer business, integration to the Core System, and even because of variable vendor product and support plans. When reviewing Data Processing systems contracts, ancillary grouping products that serve the Digital Channel with other important applications and especially the Core System will naturally increase the purchasing power and thus negotiation leverage for the bank. We commonly recommend this holistic approach to our clients as it tends to yield the best results. Banks will do a great service to their customers and shareholders by closely examining and monitoring Data Processing costs. There is a wide range of pricing models in the industry. The best way to gain insight into comparable market prices is to conduct a competitive evaluation of alternatives. The banks that take the time to do so and start the process 24 to 30 months prior to contract expiration will see the best outcome. In terms of finding solutions that effectively serve customers and addressing the institution’s business requirements at the best price and terms. This goal can be mainly achieved by either negotiating new technology contracts or renegotiating existing technology contracts. While some executives deem the technology review process painful, it nevertheless remains an important part of appropriate due diligence by the institution in a key area that is the foundation of efficient and cost-effective operations. Unless the bank enjoys annual contracts, most banks maintain multi-year contracts with the vendors of Core Processing and Ancillary Systems. With the opportunity to review alternative solutions and/or address costs only every five, seven or 10 years, it is wise to take advantage of the typical contract cycle to carefully review these business-critical applications. If not then, when? Since 1994, ICI Consulting has been a leading bank and credit union advisor nationwide. ICI is a consulting firm that supports financial institutions by providing core processing assessments, gap analyses, vendor evaluations, contract negotiation and conversion services. ICI Consulting is well known for saving clients time and money during core processing & ancillary systems evaluations and negotiations with the providers of these business-critical solutions.Learn more at ici-consulting.com. The rapid adoption of Digital Banking has exacerbated the need for banks to have responsive and innovative digital and mobile offerings.