As the web of vendors to credit unions becomes more complex – core vendors, digital banking vendors, credit/debit card processors, Loan Origination System (LOS) providers, IT vendors, consultants, loyalty programs, legal services, and the list goes on – vendor management has become a necessary core competency. However, most credit unions don’t have the time, resources and/or expertise to manage their vendors properly. At many credit unions, the problem goes much deeper. With no contract life-cycle management in place, auto-renew contracts continue, sometimes in perpetuity. There is a lack of awareness of the risks of not managing vendor contracts.
Without formal vendor management, a credit union lacks awareness of who their key suppliers are, where they are spending their money, and ensuring that their third-party vendors remain compliant with Federal and State regulations. In addition, vendor management will ensure that the third-party vendor continues to protect and secure the credit union‘s data and that of its members, whether on-premises or outsourced, reviewing annual reports and ensuring the vendor is compliant with the SSAE 18 / SOC 2 Report and Payment Card Industry Data Security Standard (PCI DSS), for example.
It’s hard for a credit union to ignore its vendors. They are critical to success, and most times, are at the heart of the organization’s processes and activities. Although invisible to members when everything is going well, failure on the part of a vendor is a direct reflection on the credit union.
So, should a credit union ask for help in this area? The answer is yes, if your credit union wants to:
Get the right answers quicker: Many credit unions share a vendor and unknowingly, may be dealing with the same issues. A vendor management partner has direct access to a vendor’s latest product solution set, can influence and be on the cutting edge of road-map development items and operations staff, and can represent the needs of several credit unions collectively, which is more effective than a single voice.
Reduce operational costs: Tracking a credit union’s contract termination and auto-renewal clauses can ensure that the most favorable pricing is offered to the credit union. A vendor management partner can develop RFP questions based on cutting-edge technology as vendors continue to bring new technologies and new capabilities to a very demanding market.
Protect your brand: A vendor management partner can have access to vendor representatives at higher levels than a client, moving your credit union to “First Class Status”. So, the vendor management partner is better able to guide the credit union toward the optimum supplier, and away from suppliers that are not the best fit. This allows the credit union to do what it does best, focus on member experience and delighting members.
Vendor management for credit unions is more than just getting the lowest price. It includes having a deep understanding of what the credit union is looking for, who are the best-in-class vendors and their capabilities in the space. As well as, having the knowledge to streamline the process of tracking multiple contracts. Plus, evaluating performance, obtaining quotes, and ensuring that supplier agreements are beneficial to both parties. This takes time and resources, but more importantly, it is a specific skill set.
To learn more about vendor management, contact us.