Contract negotiations are a significant part of the role of leadership in a financial institution. If you are looking to renegotiate your Core Contract, Debit or Credit Card Processing contract, or any other ancillary applications, you need to enter the process armed with the right information and knowledge. Here are some practical tips to help you maximize the benefits your financial institution can receive through the renegotiation process.
1. Enlist Help from Knowledgeable Consultants
A consultant can help you with the negotiations process and ensure you are looking at the terms of the agreement from all possible angles. If you are getting help from a consultant in the marketplace, make sure the consultant knows the current market place well. It would help if you had accurate advice on price and terms that comes from experience with the current technology processors, including mobile technology. This will ensure that you’re getting accurate and helpful information.
2. Choose Advisors who Understand the Digital Transformation Process
Online banking is becoming a major component of your contract negotiation. If you have not made the digital transformation, make sure you are working with advisors who understand all aspects of this process. This includes not only Online and Mobile Banking but also the new digital applications available in today’s market.
First, make sure you know your stance on APIs for your financial institution. Then, enlist the help of your consultation to get answers to critical integration questions, such as:
• How do any third-party applications integrate
• What is the state of APIs?
• Are they readily available?
• Is the core vendor moving to a total API approach to integration?
• What is the potential vendor’s position on open banking?
3. Keep the Right to Review Pricing
When you choose a consultant, make sure you retain the right to review pricing at both the unit price level and the tier volume level. You will need an overall pricing approach to compare total technology cost with your peers, including other credit unions and community banks. The more metrics and pricing details you can get as part of the negotiations process, the better your final contract will be, and the more money you will save in the long run. We have a metric that we have used for over 20 years in measuring technology costs against the FI industry as a whole. It has proven invaluable in working on getting the best price possible in the negotiations.
4. Look for Ways to Simplify the Contract
The average contract for a Core System and its ancillary applications is often 110 to 130 pages long. One consideration to make in these negotiations is finding ways to simplify the contract. This gives you the ability to review it more closely and also ensures you do not lose significant issues in the details, which can lead to a less beneficial contract than you intended.
5. Consider Travel Costs
The right consultant is essential in your negotiations, and that consultant may not be local to your bank. Look for ways to save by cutting travel costs. Using video call functionality means your consultant can guide you through the negotiations process, help you analyze the contract, and give you appropriate advice, all without adding unwanted expenses to the process.
At L. Michael Wofford Consultants & Advisors, we have over 21 years of consulting experience. This includes vendor selection and pricing negotiation on behalf of financial institutions. We have worked with both large national banks and local community banks and credit unions.
We have experience with all major providers in the market place. This includes:
• Core Banking
• Cash Management
• Bill Pay
• Online Account Opening
• All Payments Innovations
• Mobile Banking, including both Digital and Legacy systems
Over the years, we have built relationships with the vendors in these industries, and those relationships benefit financial institutions during negotiations. We know what the market price is, and we will work hard to get the best price for you. We also utilize video conferencing to provide all of this without travel costs.
If negotiations are in your future, partner with the right consultants to get through the process with ease. Reach out to L. Michael Wofford Consultants & Advisors to begin discussing your contract goals with us.
Over the years, we have built relationships with the vendors in these industries, and those relationships benefit financial institutions during negotiations. We know what the market price is, and we will work hard to get the best price for you. We also utilize video conferencing to provide all of this without travel costs.
If negotiations are in your future, partner with the right consultants to get through the process with ease. Reach out to L. Michael Wofford Consultants & Advisors to begin discussing your contract goals with us.
