Conversion Risk Assessment

Ae system conversions present tremendous risks to a bank or credit union. It has been compared to building an airplane while trying to fly it. Fortunately, a careful assessment of the risks and proactive management of these risks will help reduce threats to a smooth conversion.

Many of the immediate risks in a system conversion revolve around the accurate transfer of the data from one service provider to the other, the setting of system parameters to provide intended products and services, and effectively processing transactions on the new system. When these basic tasks are completed, Management still faces the risks of delivering the promised return on the Credit Union or Bank’s investment by ensuring that products and services are delivered to customers or members. In addition, the new system should provide improved efficiencies in the back office. Ultimately, the new vendor must support and align with management’s strategy.

The vendor’s success in past conversions does not, however, guarantee a smooth conversion.  Among the most critical steps Management must take to ensure a smooth transition:

  • Strong management and employee engagement in the process through effective project management processes
  • Thorough testing, including integrated (process flow) testing, unit (application) testing and “mock” conversions
  • A training program that provides employees with the skills to utilize the new system
  • Clear and frequent communications to customers and employees on the process and progress of the conversion
  • A well-organized team structure accountable for the implementation
  • Management’s commitment to defining and achieving the overall goal