How AI Is Changing What Credit Unions Should Demand from Vendors

As AI and industry consolidation reshape financial technology, credit unions should rethink vendor contracts, prioritizing flexibility, transparency, data protection and accountability to stay competitive and avoid outgrowing agreements.

By SRM

Most technology contracts were designed around a pace of change that no longer exists.  

Renewal cycles were predictable. Vendor roadmaps moved at a speed institutions could reasonably plan around. The biggest risks were pricing escalators, bundled services that hid true costs, and ensuring vendors remained accountable for their service commitments. 
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That environment no longer exists. 

Artificial intelligence has compressed technology cycles in ways that have fundamentally changed the risk profile of long-term vendor agreements. Contracts written for the old environment are not just potentially overpriced; they are potentially misaligned with where technology is going, who will own it, and what your institution will need from it. 

With over 12 years of advising financial institutions on strategic sourcing at SRM, I’ve always encouraged credit unions to look beyond pricing and terms and bring market awareness and strategic discipline to every vendor negotiation. Today, the focus has expanded to include flexibility, accountability, and structuring agreements that allow financial institutions to adapt when circumstances change, as they inevitably will.

Most Vendor Contracts Assume Stability That’s No Longer There. The technology landscape and operating environment has changed dramatically since many banks and credit unions signed their current contracts: 

• Vendor consolidation is accelerating across financial services and AI. Example is in June 2026 Backbase acquiring Kasisto, one of the longest-standing conversational AI platforms built specifically for banking. With this acquisition, the strategic destination of the product has changed in many cases mid-contract with an organization with different ownership and a roadmap no longer solely driven by the platform they evaluated. 

• Regulatory expectations are tightening. In April 2026, Fannie Mae issued a lender letter requiring explicit AI governance for any seller-servicer using AI in origination or servicing. Similar guidance is expected from NCUA and banking agencies.  

• The renewal question has changed. The question before the next renewal is no longer just what the vendor will charge. It’s what the vendor will be, what the platform will look like, and what happens if neither answer resembles what the institution evaluated when it signed. 

The contracts that assumed a stable vendor landscape are now working in ways most did not anticipate. The good news: the same market forces driving that instability have also created meaningful leverage for institutions willing to use it.  

Accelerating financial services M&A activity, creates an important opportunity for combining institutions to renegotiate their contracts. In one merger of equals, SRM’s vendor contract work across networks, processors, and technology agreements delivered more than $250 million in savings and business terms strengthening the partnerships with vendors. As institutions approach their own renegotiations, whether during contract renewal or because of M&A, contract terms from previous cycles must be reevaluated. 

What Institutions Should Now Be Demanding. The contract conversation AI is forcing goes beyond AI vendors. It’s about every technology agreement and whether its terms reflect the pace of change and how those relationships will evolve while enabling responsible innovation.  The goal is simple: Don’t outgrow the agreement. 

A few things institutions should now be insisting on that were not standard practice in the previous contract cycle: 

• Term length with genuine optionality. Long term commitments made sense when technology evolved at a more predictable pace. Today, shorter terms, or longer terms with meaningful renegotiation windows and practical exit provisions better reflect how much technology, the market, and the relationship itself can change over the life of an agreement. 

• Transparency into individual product and service costs. Bundled pricing can hide what an institution is actually paying for and using and makes it nearly impossible to assess the value of specific capabilities or compare them against more competitive alternatives.  

• Data rights and downstream vendor visibility. Most institutions have reasonable visibility into their direct vendor relationships. Far fewer have visibility into what their vendors’ technology partners do with their data. Contracts should require vendors to disclose their material AI sub-processors, provide notice when those relationships change and extend the institution’s data protection requirements throughout the entire vendor chain. 

• SLA accountability that reflects the stakes. As AI moves closer to core functions — credit decisions, fraud detection, and member/customer servicing, SLA language must reflect actual business impact of a service failure, not simply provide nominal credits or fees. 

• Explicit provisions for vendor technology changes. Whether driven by model deprecations, platform transitions, acquisitions, or other material technology changes, institutions should know, in writing, what their options are when the underlying technology their contract is built around no longer exists in the form they agreed to.

The Competitive Angle Institutions can lose years of competitive positioning not because their vendor was bad, but because their contracts didn’t enable them to respond to a changing environment. In an era of rapid AI driven change, institutions that proactively renegotiate or restructure vendor agreements can create compounding advantages such as better data, price compression, greater flexibility, and deeper customer relationships. Those advantages continue to build over time and do not simply disappear when a contract finally expires. 

SRM is a DakCU Senior CAP Partner that has assisted a number of Dakota credit unions providing savings on product agreements and contract optimization. They have been selected by more than 700 financial institutions to advise in areas such as payments, digital banking, core processing, and operational efficiencies, unlocking billions of dollars in value and improving the competitive advantage of clients with a reputation for industry-leading subject matter expertise, a proprietary benchmark database, and proven negotiating skills. Contact Scott Eaton, VP Business Development, or George McDonald, DakCU’s Chief Officer of Strategic Services or visit srmcorp.com for more information.