The Value of Cleaning up Data Before a Conversion or Acquisition

When financial institutions are going through an acquisition or converting their core systems to a new vendor, it is essential that data scrubbing occurs prior to conversion or integration. The elimination of inconsistencies, invalid values and other shortcomings in the legacy database is necessary to successfully convert the data to the format required in the new system. While it may not be exciting, data scrubbing is a critical element of any successful project management plan, saving time and money.

Important items to target during data scrubbing:

User fields give institutions the capability to apply criteria to accounts that may not be part of the system they purchased. If institutions are utilizing user fields differently, the data must be analyzed and cleaned before integration takes place.

Duplicate customer account numbers can appear among merging institutions, requiring analysis and a plan to resolve the issue prior to a merger.   

“Customer information systems, which warehouse customer records, are one of the most difficult areas in which to maintain accuracy, even within one financial institution,” said Gladys Rodriguez, Consultant/Project Manager. “Customers can have multiple account relationships, connected by household, and the relationships can change over time. In addition, when there is an acquisition, customer records may be duplicated in both systems.” 

Closed accounts on the core system represent a “non-value add” cost and should be identified and purged prior to a merger or system conversion. While institutions and vendors may have contracted a schedule to purge closed accounts on the system, a review of the timeline in conjunction with the actual conversion date is required.

Failure to clean data before conversion or integration can impact customer accounts or the FI negatively. The most common ways that this may happen include:

• The institution may start waiving fees it does not typically waive due to user field configuration.
• If the vendor charges a fee to maintain closed accounts on the system, institutions could be charged unnecessarily for failing to purge closed accounts.
• The customer experience at the time of acquisition could be poor, which can mean a loss of customers.

It’s also worth noting that the effort and cost to clean up the data after conversion can be up to twice as much as scrubbing it beforehand.

“The challenges to data cleansing include the time required to do it and identifying resources who know the systems well enough to do the cleansing,” Rodriguez said. “Only the financial institution can know what is not aligning correctly. Only the institution can clean its data.” But it’s certainly worth the investment of time upfront.

Creating a project plan that includes data scrubbing begins with creating a checklist to answer vital questions like how long account records are being maintained, how duplicate records will be validated and how customized user fields are utilized.

Profit Resources Inc. helps banks organize their conversion or acquisition project, reviewing the project plan, ensuring that data scrubbing is part of it and creating a work stream to address it. PRI also can manage the entire project, partnering with the bank.

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes and effective use of technology. Contact us to learn more about our personalized approach to conversions and acquisitions to propel growth and improve profitability.