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For years, the trend in the financial services sector has been toward consolidation as the total number of US financial institutions (FIs) has been on a steady and steep decline with the roster of supporting vendors following a similar (if less dramatic) trajectory. Most recently, however, we are starting to see the supplier pendulum swing in the opposite direction, providing more choice to FIs in their vendor selection process.

The negotiation process for expiring vendor contracts at a financial institution (FI) often poses unique challenges. For example, those that have an existing relationship with the incumbent supplier need that relationship to remain constructive, especially since it will be ongoing once the contract is signed.  This can prove particularly difficult when negotiating topics like pricing must be addressed.

In the weeks preceding last November’s US election, bankers spoke of finding ways to apply common-sense tweaks to the edges of onerous regulations like the Dodd-Frank bill. A few short months later, talk has shifted to an outright repeal of the Durbin Amendment, if not of Dodd-Frank itself. We had expected such efforts to gather steam over the next 90-120 days. However, the general pace of reform has been slow, which will likely mean attempts to streamline Dodd-Frank may not begin this soon. 

The typical financial institution has dozens of contracts in place with numerous vendors that support its operations (both customer-facing and internal). As a result, staying on top of the expiration dates for all of those agreements to maintain an effective renewal process can present a significant challenge. At a minimum, doing so is simply best practice, but in other cases, such due diligence may also be a regulatory requirement or a board mandate. 

For all the banking executives that oversee vendor relationships, see if this scenario seems familiar: A long-time vendor visits your institution and, out of the blue, offers a contract extension along with attractive incentives; e.g., signing bonuses, rebates, pricing discounts, etc. To date, you’ve enjoyed a solid relationship with this partner with no plans to break the contract at expiration, so this provides an opportunity to look like a hero to your institution, bringing in an unexpected windfall to fund other priorities. What could be the downside? 

Budgeting and planning season is a time for evaluating priorities and costs. It should also be a time for reviewing vendor contracts.

Too often banks and credit unions make the mistake of plugging vendor costs into their budgets and forecasts without questioning whether those figures can change. The truth is that a savvy institution can find opportunities to reduce vendor costs without switching vendors or impacting service levels by simply asking the right questions.

According to the Federal Deposit Insurance Corporation, approximately 27 percent of all American households are unbanked or underbanked – that’s 50 million individuals.

For purposes of this article, unbanked refers to individuals who don’t have a bank account and underbanked refers to those who supplement their bank account with alternative financial services like check cashers. Both underbanked and unbanked households are typically forced to rely on nonbank financial or high-rate lending solutions such as payday lending, tax refund, and settlement loans. They are out of the mix for traditional banks, which means little to no opportunities for payments and fees from them.

According to the Federal Deposit Insurance Corporation, approximately 27 percent of all American households are unbanked or underbanked – that’s 50 million individuals.

For purposes of this article, unbanked refers to individuals who don’t have a bank account and underbanked refers to those who supplement their bank account with alternative financial services like check cashers. Both underbanked and unbanked households are typically forced to rely on nonbank financial or high-rate lending solutions such as payday lending, tax refund, and settlement loans.

In today’s economic climate, mergers and consolidations of financial institutions are fairly common.  Anyone who has been involved in one knows it is a time of opportunity and critical decisions. So many considerations go into such transactions, most of which legal teams oversee. There are benefits of working with companies offering proprietary benchmarks and experience that goes well beyond the scope of work offered by traditional advisors – bringing an innovative and proven approach that mitigates expenses and maximizes revenue.

According to new National Credit Union Administration rules, before 2019, many credit unions will need to significantly increase their capital to adequate levels.