Member Login

THE MEMO

DAKOTA CREDIT UNION ASSOCIATION
  • Advocacy
    • Government Affairs
    • Grassroots Action Center >
      • Advancing Communities
      • Bill Tracking
    • Political Fundraising
    • Regulatory Advocacy
    • Preserving Financial Choice for North Dakotans
  • Compliance
    • Compliance Resources
    • Compliance Solutions >
      • AffirmX
      • CECL
      • ComplySight
      • CU CMS
      • CU PolicyPro
      • InfoSight
      • PayLynxs
      • RecoveryPro
      • Training
    • The Memo: Compliance
  • Member Resources
    • Awards >
      • DakCU Awards
      • CUNA Awards
    • CU Awareness (SWAP)
    • DakCU Foundation >
      • Donor Wall
      • Memorials
      • Vacation Sweepstakes
    • DakCU Health Benefits Trust
    • Financial Well-Being for All
    • Professional Development >
      • Chapters
      • Emerging Leader Program
      • Sales CU Training
      • Training
    • Strategic Partners >
      • CAP Program Directory
      • Compliance Solutions
      • Pee Wee and Friends®
  • News & Events
    • The Memo
    • Events Calendar
    • Annual Summit >
      • Crashers
      • Presenters
      • Sponsors
    • New Ideas
    • Sales CU Training
  • About Us
    • Board of Directors
    • Contact Us
    • Our Team

Relationship Dos and Don’ts for Contract Negotiation

2/2/2023

 
Picture
It’s a perfect time for credit unions to revisit third-party contract relationships. Are you exploring all possible avenues to control costs? ​
In SRM’s 30 years of experience representing our clients in vendor contract negotiations, we’ve developed deep insights into the best way for financial institutions to approach this process. We recently boiled down several best practices into a timely white paper titled “Rising to the Challenge – SRM’s Seven Rules for Optimizing Vendor Contracts.”

It’s a perfect time for banks and credit unions to revisit third-party relationships. To start, synergies with fintech firms have never been stronger. These service providers are well-equipped to rapidly design and deliver digital solutions sought by customers, often at a lower cost than in-house development.

At the same time, the current inflationary environment has FIs exploring all possible avenues to control costs, especially given labor expense trends.

Let’s look at two of SRM’s proven rules – the need for a disciplined approach and the necessity of tapping into outside relationships.

Combining Discipline and Expertise
“Keeping it professional” involves more than limiting the role of emotions. A programmatic approach is necessary for the effective management of financial technology contracts. It’s helpful for financial institutions to assign a Project Lead – most likely the CFO, Controller, or, in larger organizations, a delegate from the finance department – as the point person for each agreement. This is not to minimize the procurement department's role if such a function exists. It is an acknowledgment that these types of contracts require specialized knowledge to supplement traditional procurement skill sets.

Important perspectives and input exist throughout the organization – spanning customer support, IT, compliance, and other functions. We also recommend that the Project Lead set clear priorities for the relationship – for the negotiation process, as well as a framework for successful ongoing operations.

Leverage Outside Relationships
Information is power. Much of the imbalance of power inherent in a contract negotiation stems from the vendor’s deep knowledge of the space — precisely the type of expertise the bank or credit union aims to leverage through their relationship.

Conversations with colleagues at other financial institutions who have tackled similar projects, industry benchmarking data, and other forms of due diligence are all helpful and recommended steps. An even more-valuable step is to enlist a partner with similar domain expertise and market insight to assist with vendor selection and contract negotiation. Having someone in your corner who has built a cache of benchmarking data and negotiation proficiency can level the playing field. Another excellent resource is the use of contract management software.

 The Bottom Line
The vendor contract negotiation process should comprise only a small sliver – albeit a very crucial one – of a bank or credit union’s long-term relationship with a service provider. It can set the stage for operational and financial success and, therefore, must be approached in programmatically and professionally.

The assignment of a cross-functional team with clearly defined roles and responsibilities is an essential step in this direction. You’ll find more on these and our other rules for optimizing vendor contracts in SRM’s new white paper.

SRM is a DakCU Senior CAP Partner that has been helping a number of Dakota credit unions with card portfolio savings. 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 improved the competitive advantage of its clients with a reputation for industry-leading subject matter expertise, a proprietary benchmark database, and proven negotiating skills. Visit srmcorp.com for more information or contact Blaine Peterson, Senior Vice President or George McDonald, DakCU’s Chief Officer of Strategic Services.
Picture

Comments are closed.

    The Memo

    The Memo is DakCU's newsletter that keeps
    ​credit union professionals updated on current news and information. ​

    Memo Home

    Want the Memo delivered straight to your inbox?
    Sign Up Now


    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021


    Categories

    All
    Action Alert
    Advocacy
    Awards
    Awareness Campaign
    Compliance
    CUPAC/CULAC
    Dakota CUs Give Back
    Events
    Facebook Creeping
    Financial Well Being
    Foundation
    Fraud Alert
    Grants
    In The Spotlight
    Marketing Tips
    Member Solutions
    Miscellaneous
    ND Legislative Update
    News And Notes
    President's Perspective
    Press Releases
    SD Legislative Update
    Webinars

Copyright Dakota Credit Union Association.  All Rights Reserved.
2005 N Kavaney Dr - Suite 201 | Bismarck, North Dakota 58501
Phone: 
800-279-6328 | info@dakcu.org | sitemap | privacy policy
Picture
Picture
Picture
  • Advocacy
    • Government Affairs
    • Grassroots Action Center >
      • Advancing Communities
      • Bill Tracking
    • Political Fundraising
    • Regulatory Advocacy
    • Preserving Financial Choice for North Dakotans
  • Compliance
    • Compliance Resources
    • Compliance Solutions >
      • AffirmX
      • CECL
      • ComplySight
      • CU CMS
      • CU PolicyPro
      • InfoSight
      • PayLynxs
      • RecoveryPro
      • Training
    • The Memo: Compliance
  • Member Resources
    • Awards >
      • DakCU Awards
      • CUNA Awards
    • CU Awareness (SWAP)
    • DakCU Foundation >
      • Donor Wall
      • Memorials
      • Vacation Sweepstakes
    • DakCU Health Benefits Trust
    • Financial Well-Being for All
    • Professional Development >
      • Chapters
      • Emerging Leader Program
      • Sales CU Training
      • Training
    • Strategic Partners >
      • CAP Program Directory
      • Compliance Solutions
      • Pee Wee and Friends®
  • News & Events
    • The Memo
    • Events Calendar
    • Annual Summit >
      • Crashers
      • Presenters
      • Sponsors
    • New Ideas
    • Sales CU Training
  • About Us
    • Board of Directors
    • Contact Us
    • Our Team