[November 29, 2017] |
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SRM Identifies Key Trends in Vendor Contract Negotiations for Banks and Credit Unions in 2018
SRM (Strategic Resource Management), a leading independent contract
advisory firm for financial institutions, has shared its predictions
concerning how trends in vendor contract negotiations will impact banks
and credit unions in 2018. Understanding these trends can help financial
institutions identify opportunities for cost savings and revenue
enhancements as they address contract expirations and technology
upgrades in the coming year.
Over its more than 25 years of working with banks and credit unions to
improve the outcome for them when negotiating contracts, SRM has amassed
a proprietary set of data that it updates in near real time to determine
what dynamics in the market may impact clients in the short and long
term. The information derived from this data not only covers present
trends in pricing, terms and conditions for vendors in various parts of
the industry, but also gives SRM a historical perspective concerning
macro trends.
Brad Downs, CEO of SRM, commented, "There are more vendors today than
yesterday and there will be more vendors tomorrow than today. The
contracts these vendors are introducing into the market feature an
increasing level of sophistication as each jockeys for a competitive
advantage. Financial institution executives and managers too often have
to sacrifice other equally important responsibilities to have the time
to consider the growing complexity in these contracts and have
comparative data that is very limited in most instances. SRM does this
for a living, and utilizes the experience we have and the information we
gather to deliver bottom line value to our clients."
Bottom Line Boosters
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Sooner Rather Than Later. The growing complexity of vendor
relationships and the drive to continually improve bottom line results
will create pressure for banks and credit unions to become more
diligent in monitoring the various time sensitive aspects of their
supplier contracts in 2018. Keeping track of the basic triggers within
the contracts for auto-renewal, expiry date, notification of intent to
terminate, etc. will insure maximum leverage and allow financial
institutions to lock in today's pricing and terms ahead of inflation
and other forces that may emerge in the future.
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Going Long. Some vendors are offering significant discounts for
extended term contracts. Institutions with vendor relationships that
have served them well will continue to utilize this option to gain
access to the more favorable pricing and terms being offered for these
longer commitments. In 2018, cards will continue to represent one area
where longer terms are yielding benefits to financial institutions as
card companies battle for brand footprint.
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The Digital Revolution (News - Alert). Innovation in digital banking will
continue to drive an increase in vendors in this space in 2018. Banks
and credit unions will find themselves working with smaller companies
that have expertise in this area and struggling to determine how to
best evaluate their options. Negotiating for the win/win arrangement
will be made more difficult given the entrance of these new companies,
technologies and pricing options.
Technologies to Review
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Not Mobile Only, But Mobile First. Increasingly, consumers are
making purchases, paying bills, transferring money and checking their
balances on their smartphones and tablets. Banks and credit unions
need to be thinking about how to optimize their debit and credit card
portfolios in this digital first world, meaning traditional
penetration, activation and use (PAU) campaigns will need to be mobile
first as well.
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Old Dogs, New Tricks. Systems that have been part of banking
almost since its inception will continue to be important areas of
focus in 2018. Financial institutions may spend considerable time and
money in the next 12 months looking at ways to modernize them. This
will make core processing, payments processing, loan origination and
CRM, along with a few others, areas to watch.
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The Branch Is Not Dead, Just Different. The review of branch
strategies will intensify in the coming months, meaning more branches
will be closed or kept open but given technology upgrades.
Institutions will find themselves selecting and negotiating with
vendors - some old and some new - who provide the new branch
technology required to make branches less resource intensive. The need
for data specific to the pricing and terms in this emerging area will
proportionately increase as well.
Roadblocks to Progress
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Ongoing Consolidation. Mergers and acquisitions (M&A) could
delay IT initiatives in 2018 as financial institutions focus on
completing these deals and integrating the respective operations. An
increasing number of financial institutions will be looking for ways
to decrease these types of impacts by isolating their day-to-day
operations from the distractions created by M&A activity. The
incorporation of industry-savvy partners to help them sort out various
elements of these acquisitions, including contracts with critical
vendors, will be one of the options they will use to achieve this.
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Security, Fraud and Other Monsters. Growing data security
requirements and breaches will remain a material concern for banks and
credit unions in 2018. To combat these eventualities, most
institutions will make large investments in the areas of
cybersecurity, fraud mitigation and enhanced authentication. Emerging
technology in fraud prevention, card control and biometrics will be
followed by others to make this area as dynamic as payments and
digital banking.
Downs adds, "Despite the number of changes going on in this industry, we
want banks and credit unions to understand the position and leverage
they can have to negotiate contracts that work well in their favor, and
to the benefit of stakeholders, while still maintaining a really
positive relationship with their solution providers. The most important
advice we can pass along to any financial institution is to review
contracts often and begin the negotiations well ahead of the
auto-renewal or intention to terminate. These best practices transcend
any market cycle or new technology that may emerge."
About SRM
SRM (Strategic Resource Management) has been trusted by more than 700
financial institutions to identify cost savings and new revenue
potential in their contract relationships. Over its 25-year history, SRM
has earned a reputation for vendor neutrality and financial
responsibility. Using a proprietary database of industry contracts and
pricing, its thousands of performance-based engagements span many
distinct contract areas and have saved its clients billions of dollars.
Visit www.srmcorp.com
for more information and follow the company @SRMCorp.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171129005190/en/
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