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Fall has arrived and the holidays will be here before we know it. What this means for many of us is that Q3 is closing and budget priorities for 2019 are being finalized. In the spirit of this special time of year, SRM wants to revisit a few vendor contract management reminders that may be useful to you at this time.

These tips are not only useful during budget season when the hunt for savings that can be used to fund other initiatives is vital. They can also help you add value to your institution throughout the year. In fact, vendor performance management should be a year-round discipline. We know now that finding ways to reduce costs or enhance revenues can be particularly important.

Most financial institutions are moving into the heart of budget season, which offers a great opportunity to take a step back and assess business priorities. In many cases, however, budget planning also carries a heavy dose of frustration. As I came to call it over my years in the industry, Doctor No takes up residence in the office – putting the kibosh on a variety of worthwhile and aspirational projects.

Department heads realize that no budget will have room to fund every project, and good managers find ways to free up enough dollars to pursue a select group of long-term initiatives alongside the “keep the lights on” necessities. Nonetheless, by the time the process is complete, it inevitably seems like the belt-tightening has squeezed out too many of the promising ideas.    

Before joining SRM, I worked almost exclusively with the top 50 U.S. banks, helping them with strategic sourcing decisions and vendor contract negotiations. Since coming to work for SRM though, I’ve been exposed to a broader array of sizes and types of institutions, spanning both the 150 financial institutions exceeding $10 billion in assets as well as the 12,000 banks and credit unions with assets below $10 billion. Given this perspective, it is not difficult to notice the many differences between the national and regional institutions versus those who operate in the community market. In the realm of vendor management, these differences manifest in three distinct ways.  

Despite several well-publicized bumps in the road, the U.S. migration to EMV-based chip cards has undeniably reduced payment fraud at the physical point of sale. That’s the good news. On the flipside, increasing fraud rates in the rapidly growing card not present (CNP) channel have the potential to more than offset gains in card present (CP), perpetuating an overall upward trend in card fraud.