Many financial institutions are experiencing concerns about revenue, the bottom line, on-going regulatory expectations, low interest rates, improving efficiencies and the pressure on net interest margin. Add to that inflation and economic uncertainty – all of this is most likely affecting your financial institution’s ability to reach or exceed your performance goals.
But on a positive note, by keeping a close eye on your product and service delivery systems – as well as the costs and terms of your service contracts – you can create income and savings opportunities that will better-position your financial institution’s success.
Banks and Credit Unions must provide a range of mobile and online options in order to remain competitive and satisfy consumers who expect convenience and accessibility when conducting financial transactions. FIs that wish to serve their account holders will increase spending on technology for such items as mobile applications, online banking, payment software, and security.
As this paradigm shift in service delivery becomes the industry norm, JMFA has worked with many clients to ensure they are making informed decisions when it comes to choosing a product vendor or renewing a legacy service contract. Simply signing the contract on the bottom line, without a careful review of the services provided – or the contract terms – can result in:
For many institutions, signing a new service contract – or renewing an existing one – often becomes a matter of habit. If you are satisfied with the level of service from a vendor, you might not think of the possible benefits of having your contracts reviewed and possibly re-negotiated by a professional. From experience, many clients we work with are only familiar with the pricing they already have in place. And, they are often unfamiliar with how pricing for services has changed over time, as well as the possibility of any realistic cost-savings. This can put a financial institution at a major disadvantage when dealing with a service provider agreement.
What’s more, if you simply let your contracts auto-renew every time, it is possible that your service needs may have changed without your even getting the chance to explore alternative or lower-priced options.
For example, take a look at some of the most popular consumer financial services available today: mobile banking and Internet banking/bill pay products. A professional review of your current contracts for these services can uncover substantial savings and possible incentive income opportunities, as well as potential improvements in the contract terms.
For one client, overwhelmed with normal day-to-day operations, the savings opportunity was significant when it came to negotiating a vital core processing contract. By understanding their concerns and needs, we saved them valuable time that they could be using for other critical tasks and much more.
Ultimately – after securing improved rates and terms – the end result was a savings of more than $500,000 (approximately $72,000 per year, over a seven-year period).
Given the number of service contracts held by the typical institution, the potential for cost-savings and monetary incentives is tremendous for your competitive position. Savings from a contract review offers a solution for institutions to invest in updating technology or enhance your service-offerings to account holders. Or, it is possible that the monetary rewards may provide the funds necessary to expand your business or open new branches.
If you don’t have in-house contract expertise, you are likely spending valuable time keeping your service contracts current while you could be focused on more profitable account holders service activities. A professional audit of your contracts will help to uncover areas where improvements can be made. And depending on your current agreements, the findings can lead to savings opportunities, improved terms, service upgrades, and increased revenue potential that can offset some of the economic and regulatory challenges you may be facing.
So don’t delay. Putting a professional review of your service contracts on the back burner can result in the loss of monetary rewards that could help you positively impact the bottom line, as well as improve account holder service.
Learn more, download the whitepaper, “Three Reasons to Give Your Contracts a Closer Look” or watch our on-demand webinar, “Uncover Hidden Treasure in Your Vendor Contracts.“
Contact us to receive a FREE evaluation of your service contracts.