A SHARED BRANCHING SOLUTION FOR FIRST WEST CREDIT UNION by Farhan Virji Bachelor of Technology, BCIT 2005 and Eric Wang Bachelor of Science, Ocean University of China PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In the Management of Technology Program of the Faculty of Business Administration © Virji, Wang 2010 SIMON FRASER UNIVERSITY Term Summer 2010 All rights reserved. However, in accordance with the Copyright Act of Canada, this work may be reproduced, without authorization, under the conditions for Fair Dealing. Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately. Approval Name: Farhan Virji, Eric Wang Degree: Master of Business Administration Title of Project: A Shared Branching Solution for First West Credit Union Supervisory Committee: ______________________________________ Pek-Hooi Soh Senior Supervisor Correct Title – Consult your Program Assistant ______________________________________ Rick Colbourne Second Reader Correct Title – Consult your Program Assistant Date Approved: ______________________________________ ii Abstract One strategic decision for First West Credit Union executives is to implement a Shared Branching service so that a member of one subsidiary can acquire banking services in a branch of a different subsidiary. First West owns two distinct subsidiaries – Envision Financial and Valley First. Each runs different banking systems. The integration of these systems is a business challenge. Our research evaluates four business solutions using existing tools and frameworks, such as gap analysis and cost/benefit analysis, reflecting the business priorities. In the short term, we recommend implementing the service provided by CUETS Financial, a service partner of the Canadian credit union system, to address the intermediate need. For a longer term, we believe First West should explore a potential solution from Central 1, a service provider for Canadian credit unions, or the option of developing an interface in-house due to the functionality and scalability advantages. We do not recommend banking conversion because it is cost prohibitive, unless First West decides to pursue a different long-term strategic goal. iii Table of Contents Approval .......................................................................................................................... ii Abstract .......................................................................................................................... iii Table of Contents ........................................................................................................... iv List of Figures................................................................................................................. vi List of Tables ................................................................................................................. vii Glossary ........................................................................................................................ viii 1: Introduction ............................................................................................................... 1 1.1 Background Information .......................................................................................... 2 1.1.1 What is a Credit Union ................................................................................. 2 1.1.2 First West Credit Union History .................................................................... 2 1.2 Banking System History of Key Stakeholders .......................................................... 5 1.3 Banking System Platforms ...................................................................................... 6 2: Strategic Issues......................................................................................................... 8 2.1 Shared Branching ................................................................................................... 9 2.2 Benefits for First West Credit Union ...................................................................... 10 2.3 First West Credit Union Long Term Strategy Alignment ........................................ 11 3: Requirements and Analysis Criteria ...................................................................... 13 3.1 Business Requirements ........................................................................................ 13 3.2 Solution Analysis Outline ....................................................................................... 14 3.3 Methodology ......................................................................................................... 17 4: Banking System Conversion .................................................................................. 19 4.1 Gap Analysis ......................................................................................................... 19 4.2 Cost /Benefit Analysis ........................................................................................... 19 4.2.1 Costs ......................................................................................................... 19 4.2.2 Benefits ..................................................................................................... 20 4.3 Risk Analysis ......................................................................................................... 21 4.4 Resource Analysis ................................................................................................ 22 4.5 Implementation ..................................................................................................... 23 4.6 Business Alignment ............................................................................................... 25 5: Central 1 Custom Solution ..................................................................................... 27 5.1 Gap Analysis ......................................................................................................... 27 5.2 Cost /Benefit Analysis ........................................................................................... 30 5.2.1 Costs ......................................................................................................... 30 5.2.2 Benefits ..................................................................................................... 33 iv 5.3 Risk Analysis ......................................................................................................... 33 5.4 Resource Analysis ................................................................................................ 35 5.5 Implementation ..................................................................................................... 36 5.6 Business Alignment ............................................................................................... 37 6: CUETS Enhanced Branch Services ....................................................................... 39 6.1 Gap Analysis ......................................................................................................... 44 6.2 Cost / Benefit Analysis .......................................................................................... 45 6.2.1 Costs ......................................................................................................... 45 6.2.2 Benefits ..................................................................................................... 48 6.3 Risk Analysis ......................................................................................................... 49 6.4 Resource Analysis ................................................................................................ 50 6.5 Implementation ..................................................................................................... 51 6.6 Business Alignment ............................................................................................... 51 7: Internal Development .............................................................................................. 54 7.1 Gap Analysis ......................................................................................................... 57 7.2 Cost / Benefit Analysis .......................................................................................... 58 7.2.1 Costs ......................................................................................................... 58 7.2.2 Benefits ..................................................................................................... 62 7.3 Risk Analysis ......................................................................................................... 62 7.4 Resource Analysis ................................................................................................ 63 7.5 Implementation ..................................................................................................... 66 7.6 Business Alignment ............................................................................................... 67 8: Recommendations .................................................................................................. 69 8.1 An Overview of Solution Analysis .......................................................................... 69 8.2 Ranking of Solutions ............................................................................................