Dan Fisher
Dan Fisher

With over 35 years in the financial industry, Dan M. Fisher has proven himself as a leader in the financial industry holding roles as the former director of the Federal Reserve Bank of Minneapolis and former Chairman of the ABA Payment Committee.

You can improve your vendor contract if you’re not locked into a conventional tech contract

Technology does not stand still so neither should your vendor contract. Does your vendor contract improve over time?  At contract renewal time looking ahead and creating a flexible vendor strategy is next to impossible to do if you approach the event thinking in conventional terms. Most contract discussions begin with the institution demanding lower prices and the vendor responding with a demand for a longer term contract which, if agreed to, only makes matters worse. In the end, the focus of both sides is cost and term.

The deal is executed and after year one the numbers look good for the monthly financial report, but your calling officers and retail bank staff are complaining about what the bank across the street has and you don’t. You are one year into a three-year contract and you realize two things: technology has changed dramatically and your organization is trapped by an exclusivity clause and can’t move to another source for the new technology to compete. If you had only known!

Well, getting mad at your vendor for not having a technology at the time you signed the deal is not constructive. The question you should be asking yourself is how closely did you read the contract and how broad was the exclusivity?

A 21st century vendor contract should be flexible and allow for changes in both your institutional growth and industry technology. More importantly, if you focus only on cost, cost savings is the only thing you’ll get. If you focus on incentives, the same will be true.

It is not unrealistic to expect a contract relationship to improve over time given how fast technology changes. A flexible contract that leaves room for options in the future and rewards your institution for growth can be achieved. Absolutely, a contract should improve over time and reward your growth with better terms. It takes creativity and hard work, but it most certainly can be done. Don’t get caught in the technological dust of your competition coughing on your cost savings.

Dan Fisher
Dan Fisher

With over 35 years in the financial industry, Dan M. Fisher has proven himself as a leader in the financial industry holding roles as the former director of the Federal Reserve Bank of Minneapolis and former Chairman of the ABA Payment Committee.

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The Copper River Group is a financial consulting firm that believes in the benefits technological advancement has for streamlining business.

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