The year-end planning cycle is an ideal time to take inventory of forthcoming renewal events. Financial institutions only have open windows to renegotiate many of their key contracts every five years or more. Naturally, market conditions can change dramatically over such an extended period.
A decade ago, for instance, an FI’s banking core system provider was the overriding concern. While the core remains a key infrastructure component, the ongoing push for digital-first interactions has led to more vendor relationships, each with its own long-term agreement. Given the infrequency of these negotiations, in-house leaders cannot be expected to have a 360-degree view of industry benchmarks and prevailing rates. Having the support of an expert who tracks such details daily brings immense value.
Knowing Where (and Whether) Opportunities Reside
With the advent of open architecture and streamlined API integrations, the focus has expanded from core providers to digital and online banking, online loan origination systems, and a host of other tools to enhance the customer experience. From our origins in the payments space, SRM has assembled a base of deep expertise spanning all these practice areas.
Today, creating a world class experience often involves negotiations with multiple vendors. We find ways to help our FI clients not only to save financially, but to deliver new technologies at an effective price point. To deliver such results, knowing how various providers interact and what aspects are open to negotiation is essential.
One of SRM’s core principles is to help FIs build partnerships with technology partners. Those who haven’t worked with SRM are often surprised to learn most of our negotiations generate savings without a change in vendors. A solid partnership requires that both parties are successful. An FI should seek a fair, attractive price, not one that leaves their provider weakened and unable to deliver quality service.
Similarly, if our diligence indicates a bank or credit union has already secured a favorable deal, we will report as much without charging a fee. That said, our experts find meaningful savings opportunities in more than 90% of the cases we review.
Smaller Institutions, Bigger Impact
In today’s tech-forward environment, key vendor contracts comprise some of financial institutions’ largest expense line items. The smaller the bank or credit union, the more this tends to be the case.
That’s why we’re proud to have partnered with InterLutions, a credit union service organization (CUSO), on the CU Save program. Through this recent initiative, we helped 34 credit unions save a combined $10 million by negotiating improved contracts with third-party vendors. For these mostly small credit unions, an average $300,000 expense savings enables them to be more financially secure, and to quickly deploy these funds into various member benefits.
SRM’s value add may be easier to grasp in a small FI setting, whose leaders wear multiple hats and lack the bandwidth/breadth of resources to employ experts in every practice area. SRM’s depth of insights, honed from daily exposure to the full array of vendors and the market’s evolving trends and standards, allows us to deliver value to large institutions as well- as our track record clearly demonstrates.
The Bottom Line
As technology partnerships have become increasingly central to the FI operating model, it makes more sense than ever to ensure the maximum return for your investment dollar. These vendor agreements only come up for renewal every several years, and deep knowledge and detailed advance planning is required to recalibrate existing contracts and establish beneficial rules of engagement for the upcoming terms.
Engaging with experts who live and breathe these details daily equips FIs with the necessary facts and enhances their negotiating strength with vendors. That's precisely what SRM brings to the table.