Maine Banker March/April 2013 : Page 7

was a major red flag. And needless to say, that iswhere thevendor was dropped from theevaluation process. Prediction 7 — The Core Processing Outsourcing Trend Continues But Invites More Scrutiny The core processing provider oligopoly we reviewed last year is having an impact as more providers attempt to drive banks to the outsourced environment where providers can improve their r profit t margins as they y leverage their data center invest-ments and wring more efficiency y out of f recent acquisitions. The majority y of community y bankers have been on their current core processing system for more than 10 years, with 55 percent outsourced and 45 percent in-house (source: ICBA) — not exactly y an area with frequent change.Somecore processing providers now w refuse to submit t in-house proposals. This lack k of f competition and choice is not good for banks. Bankers will begin to push back slightly y as they y realize that outsourcing comes with its pros and cons: pros in terms of f limited capital investments and cons in terms of f higher per unit costs of growth and less control. Core processing provider decisions are no longer just about who runs the bank’s deposit, loan and general ledger systems. Such decisions are now about much more, including the bank’s image item processing, ATM/debit card processing, ancillary y systems such as document imaging, loan origination, teller and deposit platforms, and new delivery y channels and payments systems demanded by y more mobile consumers. Such a decision is critical tothe bank’s future ability to compete. Complex decisions such as this require intelligent and thorough analysis. The e trend d to outsourcing g will l continue, but t bankers (and d their r examiners) will scrutinize e vendor r claims of f “don’t t worry about t disaster r recovery” as recent t torna-does, ice e storms, hurricanes and d floods have exposed d the e Achilles’ heel l of f outsourced providers, especially y those e with h data a centers in coastal areas. Even the most geo-graphically y challenged d bank k customer r has a hard d time e understanding g why y a Florida bank’s systems are e down n because e of f an n ice storm m or r a Missouri i bank’s systems are down n because e of f a hurricane. -!2#(s !02), 

 Prediction 8 — Enterprise Risk Management Models Mature and Become the Centerpiece for Every Well-Managed Bank Enterprise Risk Management (ERM) has many y definitions but can be simply described as a process that provides a high-level, top-down view w of f a bank’s key areas of f risk, allowing the bank’s board of f directors to identify y potential threats that may y affect the bank k and, therefore, help to manage the bank k within the bank’s tolerance for risk. Flying g the e bank k by y the e seat t of f one’s pants is no longer r adequate. More e sophisticated and d quantitative e measures of f risk k must be e used in a rapidly y changing g banking environment. In n recent t years, bankers have faced d risks for r which h they y were e unprepared and, in n some e cases, unaware. These e risk events caused d some e banks to crash h and d fail as they y lacked d the e resilience e to bounce e back from adversity y by y mitigating g risk k and d limit-ing g the e bank’s exposure. Every y castle wall is only y as strong as thepeople behind it. Overseeing risk management enterprise-wide is a key role of f a bank’s directorate. Without clearly y understanding possible threats, their likelihood of f occurrence, their magnitude of f impact should they y occur and their related risk, board members cannot make the informed,strategic decisions necessary y to manage risk k and preserve and grow w stakeholder value. Prediction 9 — The Customer Relationship Culture Replaces the Sales Culture Think k about t your r last t purchase. Did d you “buy” something g or r were e you u “sold” some-thing? In n today’s information n age e where e one can n research h products and d services online before e buying, the e old d sales tactics simply don’t t work. By y focusing g on n the e customer relationship, bankers can implement a culture that has customers buying products and d services because e they y want t to, not t because e they y are e being g accosted. Bankers will l ask k more out t of f their r core systems and d will l buy y more advanced d CRM (customer relationship management) Continued on page 15 Doing g Things the Right t Way Teller Tools for Success Coin Self-Service Centers C 61-201 50 Y E AR S 19 1 Contact t us : 800-347-1414 4 ext. 303 jburnham@mageecompany.com or r visit t www.magner.com -!).%"!.+%2 s 

Magner Corporation Of America
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