With increasing frequency, we are encountering banks that, for a variety of reasons, no longer have a productive relationship with a technology vendor, primarily their core vendor. As this relationship falters, many bank leaders consider converting to a new vendor, which is neither easy nor inexpensive. But remaining in a dysfunctional relationship is very disruptive and can prevent a bank from achieving its goals, which is significantly more costly. The importance of a productive bank-vendor relationship has never been greater.
Improving the effectiveness of a core vendor’s ability to service a bank sometimes will feel like pushing a rope but there are steps that banks can implement to enhance the relationship as much as possible – by actively managing their vendor.
Put Business First
Never forget that working with your core vendor is a business relationship, first and foremost. There may be a strong personal connection with your account manager but ultimately the relationship is governed by the contract between the vendor and the bank. And you need to understand that agreement fully. It is your owner’s manual on how to conduct business with your vendor. As most agreements have become needlessly complex, don’t hesitate to ask for clarifications of things that are unclear. Your vendor can help you to understand their obligations for servicing your bank and their contractual commitment to provide services. Some questions to ask yourself and your vendor about your contract:
- Are there performance standards?
- Are there remedies for non-attainment of these standards?
- Has your bank monitored their performance?
- How should you notify your vendor of non-attainment?
- Have you discussed these standards and notification requirements with your vendor?
- Do you understand your bank’s responsibilities under the agreement?
- Do you fully understand the notification requirements for non-renewal?
Defining your expectations for service, support and account management is essential, and that requires open communication. It may be determined that your bank’s expectations cannot be met, or can no longer be met, because of changes on the vendor’s end. We have seen vendors’ ability to fully service clients erode since the pandemic, so make sure you fully understand what your vendor can – and cannot – do for you. This is an essential conversation to have. There must be an alignment between the bank’s expectations and the vendor’s ability to meet those expectations for the relationship to result in the achievement of your business goals.
Ask your vendor for best practices on how to improve your relationship and how best to inform them of issues. What is the proper escalation path? Discuss how to most effectively interface with your vendor. Procedures change from time to time; make sure your staff is following the correct and current procedures.
How often does your vendor meet with your management team? Ideally, review meetings should be held quarterly, in person. When major projects are underway, you may want to meet more frequently to keep things running smoothly.
Prepare an agenda for each meeting and provide that to your vendor two weeks in advance so the team has time to prepare. The agenda should review the status of all outstanding projects and cases for resolution, recap completed projects, discuss projects in process and strategize new installs. Discuss your vendor’s software development roadmap and compare it to previous roadmaps to determine progress. Allow time for your vendor to provide an update on progress, growth, and major developments. State clearly any dissatisfaction and follow up on it in future meetings. Take notes during the meeting and publish them to all involved. This meeting should be a planned event and everyone from the bank should be prepared to contribute.
Become involved in user groups. Attend vendor national conferences. Talk with your peers -not only those processed by your vendor, but by other vendors too. Discuss your issues with them and ask how they compare to their experience. Develop a synopsis of other vendors based on their clients’ experiences and use it as a reference when assessing your vendor.
Set up a Google Alertto email you daily news of your vendor as it appears on online. Read your vendor’s quarterly reports and the transcripts of analysts’ calls. Both practices should be added to your vendor management due diligence duties.
Unfortunately, technology does not run well by itself. To perform effectively, it requires that your bank and your vendor build a trusting relationship and work together to achieve the best outcomes. Don’t assume your vendor knows what your bank needs – tell them. In short, take ownership of your relationship. While it is a shared responsibility, there is too much at stake for your bank to be passive. With the ever-declining number of bank charters, every vendor should strive to achieve the highest level of satisfaction at every bank…including yours.
Artisan Advisors Can Help
Our team will conduct a detailed contract review that includes:
- analyzing your technology agreements (not just core)
- providing a written report on our findings
- reviewing the findings with your management and then assisting your management in developing a go-forward strategy.
Importantly, every strategy must consider the commitments and obligations defined in the contract.
Our team also can undertake a more comprehensive core vendor evaluation that compares your vendor against other qualified vendors. This engagement will review service quality, functionality, and vendor management due diligence, and then provide a financial analysis based on market price. Only competitive pricing can define market price. Not all banks that utilize this approach actually convert to a new provider. When encountering fierce competition core vendors can, at times, resolve the issues to retain the bank.