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NXTsoft's webinar series titled Pausing the Pandemic Panic: Ideas and Solutions for Financial Institutions in these Uncertain Times is designed for bank and credit unions to address topics that are affecting financial institutions in these uncertain times. 

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'Reducing Unforeseen Conversion Costs' with Bobby Childs, Vice President of Business Development at NXTsoft.

Good afternoon. My name is Bobby Childs, and I am the vice president of business development for NXTSoft. And I'm excited to have you guys join us today as we continue our series: Pausing the Pandemic. And today we look at reducing unforeseen conversion cost. Again, on behalf of all of our team at NXTSoft, I just want to thank you for your time today.

Thank you for joining us. We hope you find the next 30 or so minutes very informative, very efficient use of your time. If you have any questions, please drop those in the comments. Or at the end of the slide show, you'll also see some contact information, and you can reach out to us that way.

With that said, I'd like to jump right into it. And again, I want to thank you for your time, and I hope you guys enjoy today's webinar. Before I jump too much into the conversion side of things, I wanted to talk about data in general, for a little bit, and just the importance of data and how much really we are utilizing on a day in day out basis.

I know we're all familiar with it. Obviously, we know we're generating a lot of it. But in preparing for this webinar and some other papers I've written, I did a lot of statistical research, own data, and came up with just a whole bunch of slides combined of how much we're generating on a daily basis and using personally and both in our professional lives.

The first statistic in and of itself is quite staggering. Over 2.5 quintillion bytes of data are generated worldwide daily. I did not know, A, that quintillion was a real word, or B, a real number. And so also looked at it and actually wrote it out for everybody. You can see the number generated there and how many zeroes are in that.

How many bytes of data are generated worldwide in a 24 hour day. More data was generated in the past two years than in the entire human history before, and that's going to keep replicating itself as we move forward and continue to generate more and more data per person. I don't have this one listed, but it says the average person carries 2.5 devices.

It used to be the statistic was the average person had 2.5 kids. Now we moved to devices, which I thought was kind of silly when I first thought about it. Then I thought about my own personal life and the fact that I have my phone sitting beside me as I'm doing this webinar on my laptop with my Apple watch on my wrist and my iPad sitting not too far from me in the other room.

So there's a quick four devices for me alone that I'm accounting for. I'll keep going on some of these stats. In fact, 90% of the total amount of data ever created was produced in the past two years. Let that sit in for just a minute. We know that Google obviously stays busy. They see over 40,000 search queries per second, which is just astonishing. That's over 1.2 trillion yearly.

People share more than a hundred terabytes on Facebook a day, which is somewhat unnerving to think about that. In 2019, Twitter users sent over 500,000 tweets a minute, and it's estimated that by 2022 there'll be 4.8 billion internet users out there. There were only 3.4 billion internet users in 2017.

And to give you a little bit more insight of that number, the world right now is roughly 7.8 billion. So over half of the world's population will be an internet user by 2022. The average person spends six hours and 42 minutes a day on the internet. That was another one that kind of took me aback a little bit.

So I thought of my daily usage, which is actually quite more than that with what I do, not only for a living, but in this time when we're working for home and we're here a lot more. I have children as well, too, who are also doing their school and finishing that up, so helping them. Really a staggering statistic there.

1.7 megabytes is created every second by every human. So as I talk, in just the few seconds I've talked, think of how many megabytes of data have been generated by everybody on earth. And 1.2 billion years is the number of years humanity collectively spend online in 2019, which is absolutely insane. A little bit more on the statistic standpoint before we jump into conversion.

Just a little bit of a footprint of data in our world. It would take one individual sitting down at a computer over 181 million years to download all the data from the internet. So the next time you're downloading pictures from your phone or downloading pictures off of a nice camera or something like that and it's taking a hot minute, remember that statistic and think of how long trying to download everything from the internet.

This number is just kind of interesting to me and a little creepy all the same time. But 50 years from now, the dead are projected to outnumber the living on Facebook. So you think about that as people continue to pass away, their Facebook account unfortunately never gets closed. And in 50 years, we will have more deceased people on Facebook than living.

In 2019, the global population, like I said earlier, that now is about 7.8 billion. We were at 7.697 billion in 2019. Of those people, 66% of them were unique mobile users, 5.11 billion. 4.437 billion were internet users. That's 58% of the global population. 45% of the global population in 2019 used social media and 45% of that also were using it on their phone or on some type of mobile device, which is just astonishing.

When you think of some of the people and how many people in our world don't have access to the internet or don't have access to a mobile device because a poverty levels or distress or whatnot and then you amplify that by how many people were using it. Think of the footprint that we have with data.

So from there, let's talk a little bit about data and business, specifically. At least a hundred terabytes of data stored by most U.S. Companies. So across the board, on average, we say annually a hundred terabytes of data are stored. To give you a visual representation of that, and I had it listed there as well, that's enough to fill up 10,000 Libraries of Congress annually.

We all know the size of the Library of Congress. So just an astonishing amount of data that we are compiling as businesses. Over a billion global workers are projected to have their behavior altered by algorithms. We know these data statistical algorithms are very successful. If you think something that we all encounter like Netflix, for instance.

When you go into Netflix, you're wanting to finish up your movie you're watching, or the last docu-series you were watching, and then it pops up suggested for you to watch, which oftentimes my wife or my family and I will end up watching those as well because Netflix has that dialed in pretty good.

That has generated millions of dollars in retention revenue for Netflix, just in the algorithms. Now, you take that across the board to other industries and how we're reaching, think of the power of the data that you have at your fingertips. In fact, our industry, the financial industry alone spent $9 billion in data investments in 2018.

Obviously, that number is continuing to grow. And by the end of 2020, customers will manage... I think this is important for us in our industry, to really note this. Customers will manage 85% of relationships with a business, with no human interaction. It'll be via an app, via an online portal, but they are not coming into a branch for our industry sake or a storefront or anything along that line.

I can speak for my family. In general, even from a shopping standpoint, if we're not doing it through Amazon, we're doing it through Zulily. That's my wife or someone else like that. We are definitely within that statistical range as what we do without coming face to face with anybody just how we shop and the ease it is for our family.

79% of executives believe that failing to embrace data analytics can lead to possible bankruptcy, which is incredibly shocking and incredibly eye opening. And proper data utilization by a business can bring, and this is important, up to 18% increase in revenue. So possible 18%. That's an increase we are all sitting on in the data that we use.

So that really brings me around our topic for the day. And as we talk about, I wanted to highlight just some of the statistics of data and the importance of it. And obviously, we know it's all around us. But us in this particular industry, in the financial industry, not only are we sitting on a lot of data, we're sitting on a gold mine.

But being able to utilize it also comes with how we manage it. If our data is not consolidated and it's not all in one spot, we can never really get the proper usage out of it and the proper analytics out of it, because it's too cumbersome to do. It's too hard to reach to. It's too hard to be able to get everything pulled together.

So really what we're faced with are these data conversions. And again, when I say the word data conversion, you think of a lot of things that can come to mind. Maybe it's expensive, time consuming, challenges, stressful days, sleepless nights, roadblocks.

I've never been able to talk about conversions that had anybody go, "My gosh, I love a conversion. Those are so much fun." In fact, data conversions can even be so frustrating that even something... And this may be kind of the image you have in your mind when you think of a data conversion.

But even something as simple as buying a new cell phone can become a headache. I work in technology. Had my whole career. I'm a gadget guy. So getting a new phone, getting a new tablet, getting a new computer. All of that is a lot of fun to me because this new technology. It's something I like to do.

But at the same time, getting that particular data on my old phone, for instance, moved into my new one can be quite cumbersome. Now we've made it better. And the way we've made it better is we've gone to the iCloud, for instance, or OneDrive or however we're storing stuff in one central location so we've got our data consolidated and we can move it easier.

If you remember the good old days of getting a new phone, you had to move the SIM card over and make sure all your contacts got uploaded. And God forbid, you lost your pictures and you didn't back it up to your laptop. It was just a pain. And data conversions can just be a very big headache.

Now, I'm talking simplified example here as something within a phone conversion or a laptop or something like that, but let's go real world for a minute. In our financial institutions, we're sitting on a lot of data. There are actually really three big triggers for us in the financial world as to when we've got to deal with a lot of data conversion; one, during a merger and acquisition.

Bank A buys bank B. Bank B's legacy data and all their data has to come over to bank A's new system, and all that data needs to be consolidated or converted. The second version would be doing a core change. Very similar to what I just said in the merger and acquisition, except you're changing from a Jack Henry core to an FIS core, or for my Pfizer up to Jack Henry.

Whatever that change may be, you still have to get your data moved across. You have to do this for a couple of reasons: obviously, A, utilization; and B, legal requirements which are required to retain this data for at least seven years, sometimes 10, depending upon your location.

Really, the third reason would be maybe you have a bunch of data lakes you're sitting on right now, data silos, whatever that buzz word is you want to use for that. You've got data distributed in multiple locations and it needs to be consolidated into one for proper management. But the problem is, that's just a challenge to deal with that.

So what do we do when looking at this challenge and use data conversions? Really, there's three usual suspects that are going to pop up during these types of conversions that are utilized really across the board in that. One is to do nothing. Leave that data. I'm not talking about core data here. I'm talking about image and archive data, things like check images, statements, loan documents, things along that nature. But with that data, often it's just left to sit. "We're just going to leave it sitting."

Maybe we decommission the old image system. We leave it sitting there just as a repository for research. But otherwise, we do nothing. The second way we may go is we may decommission that legacy system and we just move that data to an external source of some sort. Maybe it sits on a server. Maybe you move it onto an external drive.

Whatever it is, your data just gets moved off so that you can decommission your software and the existing hardware that it sat on, but it's moved on to an external drive. But the third really option, and this is probably the most common option use, is just a traditional conversion, which is atypically handled by your core provider. You can see my note. And again, this is by leaps and bounds, the most utilized option.

And what I want to do today is I really want to hone in to these three usual suspects and talk about some of the challenges we can face with them. And then I also want to look at just a better way of going about it so that we can reduce those costs and save that time and save that money for you in the future.

The challenge number one, that kind of pops up with that same old way of looking at things flat out, is the expense. The average data conversion costs somewhere between $50,000 and $300,000. These conversions are really done based on the data set size.

So whether you have 500 gigs or you have two terabytes, whatever that data set size may be is how that's normally priced. Now, statistically speaking, going back to all the stats we were talking about earlier, about 97% of legacy archive data is never looked at after the first 12 months.

That actually drops even more dramatically into year two and three and you start getting into like a half percent utilization. So we're talking about a massive expense for a 3% utilization rate. So to give you a nice financial example in our world, $100,000 investment is only a $3,000 return.

And now that's a return over a seven-year retention period. So you're talking, what? 30 bucks, give or take. Maybe even less than that a month. It's absolutely not getting any return on investment in doing this way. And this is one of the challenges of the old way.

That example I'm showing is more going through the core provider. But even if we talk about the challenges just in doing nothing. We think doing nothing sometimes wouldn't be that big of a cost. But if you leave stuff just sitting there, doing nothing with it, you're still having to pay the software maintenance to keep the old system running.

You're still having to pay the hardware maintenance to keep the old system running. Now you're taxing your people and having to get your people to do multiple systems, which doesn't seem like much, but it's just another step. And another step can also create human error, which can also, and we all know, create things like a breach or things like that, which can be unbelievably cost.

Also, on top of that, even migrating to an external hard drive, we're still looking at the cost of that. Maybe we decommissioned old systems. Now we have the added cost of, again, people double doing things, running up the risk of people doing that. People having to find that drive, keep up with that drive, secure that drive.

It's just not the most efficient way to be able to go about it, from a cost standpoint. I love the quote. I got to throw this one down there. "We are what we repeatedly do. Excellence, therefore, is not an act, but a habit." Being efficient in what you do, focusing on one thing really generates excellence.

Ans all the examples I'm really talking about here are very inefficient, chopped up models that are not driving that excellence that we need to manage that data properly. The second challenge we really want to look at is time.

I'm going to start with a quote on this one, because I think it's a powerful quote from Jim Rohn. "Time is more valuable than money. You can get more money, but you cannot get time." Time is huge. I'll use the example in my own life. My wife and I butted heads when we first built our house, because I wanted to get a particular group to do our yard and the rate that they were charging was just ridiculous.

And we've got a pretty decent sized yard. I live in Birmingham, Alabama area, roughly about an acre, a little over an acre lot to give you a size space with our house on it. But we also live on a hill. So for my son and I, who is 16, to go and cut and do all the yard work, we trim, hedge, all that good jazz, it takes us roughly a half a day.

So let's call it four hours, four and a half hours to get it all done between the two of us. Now, the group that I hired to do it, they are here. They show up on a truck. They jump out with two lawn mowers, two guys with weed eaters, two guys with blowers, and it looks like ants running all over my yard and they are gone in roughly 20, 25 minutes.

Highly efficient, highly fast. And they only charged me right at $135 a month and they do this once a week. So you're looking at less than 30 bucks a pop for them to cut my yard. The reality is time is money, and the time it was taking me to be able to do the yard work myself, that was time I was losing with my wife, with my kids, with my family.

Quite frankly, I can't run a lawnmower for as cheap as what they were doing my yard anyway. Once we really sat down and looked at it, the investment in somebody who specialized in what they do, and I'm driving that point home with a lot of emphasis on purpose, was so well worth it having an expert doing it.

Because yeah, I paid for it, but it saves me money and it saved me time in the long run. So let's talk about time a little bit more and the challenges you see. Again, if we do nothing and we just leave our stuff sitting there, we're automatically driving up time and taxing on our people.

Now you're having to have somebody go to a separate system and maybe it's taxing on them to find the records. Maybe it's taxing on them to remember the log in to get into the system, whatever. We are generating an extra step by doing nothing. Secondly to that would be moving things to an external drive. The exact same challenges.

They may not be having to go to a separate system, but they still have to mount that drive. They still have to find that drive. They still have to research that system. Thirdly, and our most common practice of doing that, is letting our core providers handle these legacy data conversions, but that's actually the most time taxing of them all.

In fact, the average backlog for the core provider is at best six months. I've gotten here up to 12 months. But quite frankly, we've heard of some that are going to 18 months potentially on their legacy data conversions. So to give you a date range on that. If you signed a right now for your core company to do your legacy data conversion, at best, you may get your project rolling by Christmas.

And at worst, you could potentially not even get your data done until Christmas of 2021. Excuse me, I almost said 2022. 2021, even New Years of 2022. It's an incredibly long amount of time. Now, what happens in that period of time? Well, you still have to do business as usual. You still have to maintain all the compliance.

You still have to be able to get records for customers when they request them. Your people still have to run those multiple systems. You still have to keep things going. Your people still have to do their job, all the while your data is taking forever to be converted.

In my opinion, the time crunch and the time challenge is far greater and far more expensive in the long run than even the financial impact oftentimes, because it drags on for ever. Thirdly, and this is a big one as well too, is risk. We're all in the financial industry. Risk is obviously a big four letter word, and it's something we want to avoid.

And when we talk about these same old tried methods, they can really drive risk in a lot of ways. For instance, core providers require you to send your data to them in a specific format. So if you are allowing your core provider to do your conversion for you, they're going to ask for you to get...

Number one, you have to do the leg work to prep the data to be able to go out to them. Then you have to take that data, put it on some type of encrypted, secure, external hard drive, and ship it out of your secure network from behind your secure firewall, out into the great wide open to go to them.

Yes, I am overselling that a little bit in how I'm saying it. But speaking from a liability standpoint in the financial industry, any time any data leaves your secure network, your risk goes up exponentially. It's very challenging, and it's very scary to think about that, yet that is the tried and true method that the corporate providers use, is to get you to send data out.

It elevates your time for a risk. It elevates your time for a breach. Not to mention your team, again, is left doing the legwork. Also, risk if we do nothing or we leave things alone and we migrate things to an external hard drive. We're still dealing with a risk in there, just a double entry or two touch points.

Anytime we ask humans to get involved multiple times, we are elevating the chance for error. So now with multiple systems or external hard drive, somebody is having to do things more than one time, which ups our chance for error, which ups our chance for risk, all of which we want to avoid dramatically, especially in our industry.

That's kind of the gloom and doom, almost, it sounds like. But what's the better way? What's the other option to do it. I love this quote. I've used it for my entire career. It's kind of a life motto for me in a way, too. But I think it says so much. This was said by a Rear Admiral in the Navy originally, and it's been credited and used in so many different settings and scenarios.

But, "The most dangerous phrase in the English language is, 'We have always done it this way'." I've heard it said in corporate meetings before that, "The most dangerous phrase to a business is, 'We have always done it this way'." And it could not be more true. But at the same time, it is a very dangerous place we get stuck in.

We tend to think, oftentimes, especially in the financial industry, if ain't broke, don't fix. If it doesn't have issues, we don't need to deal with it. It worked the last time, it's going to work this. But the problem is, the same old tried and true way may be costing us money, may be costing us time.

It may be elevating our risk because we've never looked at something different. We never looked at a different way. And we may be putting ourselves in the most dangerous spot of all "because we've always done it this way." So what's the option? Let's look at a better way.

Today, I'd like to introduce you to OmniView, which is actually a non conversion option. It gives you complete access to your data at a fraction of the cost and a fraction of the time. We're talking about reducing these data conversion costs. We're in the middle of a pandemic going on globally, across our country.

Things across our world have changed dramatically in all aspects in the past eight, nine weeks. What we have to do as a financial industry is also be able to roll and change with that and grow. And at the same time, relook at things, maybe relook at the traditional things we were doing to try to eliminate costs, to cut timeframes, and to up efficiency and up ingenuity in our companies.

During these conversions that we may have, these are products that still need to happen: upgrade our core systems, possibly a merger and acquisition, utilize our data. There's a better way to do that, and OmniView is just that. So what is OmniView? OmniView really a Google S-style, this is the best way I can describe it, browser-based system, which gives access to all legacy image data.

It's a single archive for all your image, states, reportments, long documents, et cetera. It runs on an in-house server or template, typically speaking on a virtual machine. The beauty of this is there's actually no conversion in OmniView. Your index data is copied in its native format, with all the metadata attached to it as well, which I'm getting in the weeds a little bit there, but that is crucially important for being able to research it properly.

And we move that data into OmniView from your legacy system. OmniView is not sold by the user. Its unlimited user access. So if you've got 10 users or you've got a thousand users, it doesn't matter to us. And it's also not just an open forum, it's integrated with active directory and it has users control and access controls built in within it so the proper people can access the proper records and what's needed in that.

So let's take a little bit of a deeper dive in that and see what this looks like. So OmniView, as I said, we remote in and install OmniView behind your secure network or behind your secure firewall. Big key right there; your data never leaves your site. Everything is done there so that your risk is at the lowest level possible.

We stand that up. Normally, it doesn't take very long. A very small footprint. From there, we actually import your legacy database into OmniView. The beautiful thing about that is what we were talking about earlier in backlog and time. We were talking about six months to a year to even 18 months in timeframe.

Generally from the point that we get OmniView stood up and we start importing that database, generally in about 48 hours we can give you complete access into your legacy database to see your data. So again, we're talking about a two day, let's say even worst case scenario, a three or four day format for you to be able to wait to have full access to that data, which could have taken you six months to a year to get to.

Now, from there, we also realized that no two financial institutions are created alike. Not everybody needs everything aligned. So we got a couple of options we can do from that standpoint. Number one, we can give you access and you can research the data. Maybe you want to leave everything at OmniView. So all your check images, your statements, your documents, everything is in OmniView. You research it from there and we are done.

Or maybe you really do need this converted, all this data into your new image system, whatever system that may be. We can give you access to OmniView during the conversion so that you can continue to do business as usual. So you can decommission old servers, decommission old software, but at the same time, we're doing your conversion behind the scenes.

And the biggest thing is there's no impact. It's business as usual for your financial institution. No doing things multiple ways, et cetera. The third option, and that is really the best of both worlds. And it's probably the one we do the most option. Again, we understand everybody's different. Maybe you want the last year of check images moved into your new image system and everything else put into OmniView. Simple as that.

We can do just that. We can move things. We call that our hybrid approach. And it allows you to really have your data put in the proper place as you want it specifically for your financial institution, but still with all the benefits of lowering cost, time frame and mitigating risks. So what are the results?

I just said these, but I'll say this again. Number one, lower cost of conversion. Why incur $100,000, $50,000, a $300,000, whatever that number may be, why incur that expense, 3% utilization rate? We're in the financial industry. Those are numbers that just do not make sense.

We're talking about a conversion cost at a fraction of what you're talking about in the traditional method. Number two is extreme time savings. For us, we're looking at about a 30-day, potentially 45 days on our worst case scenario, project lead time. And as I said before, I can give you access to your data within 48 hours of implementing our OmniView process.

Number three, we're going to mitigate that risk. We want to keep risk low at all times. We're the financial industry. We cannot have risk elevated at any time. Nothing ever leaves your secure site. Everything's done right there, in-house, behind your secure network, on your firewall. Also, by cutting down your time calls, we're also cutting down the issues and things that can happen within that.

Also, and I really didn't talk about this, just trying to kind of stay out of the weeds a little bit on it. We can dive into this, if any of you would like to see or hear more. But we also have an extensive process. We have what we call a free and missing report. We look for what we call orphan images.

So all these processes are going on in between as we're standing up OmniView and we're doing the conversion for you. All these processes are going on behind the scenes, in between the gaps, to ensure 100% accuracy of your data, to ensure that no data is lost and ensure that everything is accounted for at 100%.

The bottom line is, in doing this, the burden of conversion work falls on an expert, but also somebody that does one thing. NXTsoft and our Omni data platform. We do one thing and that is all we do. We do data conversions for the financial industry. We don't work with any other industry in that. We do them a 100% in the financial world.

And our team has got over 25 years of experience in doing this and work with over 3000 financial institutions to handle and manage their data conversion for them. I'm not reading these statistics really to read a resume, but I'm saying it's a team that's holistically focused on doing one thing. And because of that, they can do it with absolute excellency because of their laser focus. So with that, I would just like to thank you all for your time today. Again, my name is Bobby Childs. I'm the vice president of business development for NXTSoft. It's been my honor and privilege to be able to share with you today.

I hope you found the day informative. I hope you found that efficient use of your time. If you have any questions, please don't hesitate to reach out. You can see our website and phone number there. We also have an email, info@nxtsoft.com, you can reach out to. If you would like to reach out to me directly, my email is bchilds@nxtsoft.com.

I would love to chat with you and hear more about any conversion questions you might have or any other questions in general you may have about NXTSoft. Thank you for your time today. I hope you have a great day, and we look forward to speaking with you in the near future.