September/October 2015


Managing Technology Service Provider Relationships

By Stephen D. Heckard

Broken vendor relationships can often result in core processing conversions and, surprisingly, those conversions happen more frequently than many bankers realize. When core vendor relationships fail to perform, quite often the technology being provided subsequently fails to meet expectations. Conversions today are complex, disruptive and costly, but sometimes are necessary when the bank’s needs do not align with a core system’s capabilities.

With the seemingly endless amount of technology that banks have available, never has it been as important to manage the core vendor relationship as it is now.  Vendor relationships are a shared responsibility between vendor and bank. If either party fails in its duties and responsibilities, the relationship will not be productive and the greatest benefit of the technology being provided won’t be realized. Neither party wants that to occur. 

To avoid the possibility of a dysfunctional or otherwise unsatisfactory vendor relationship, there are several steps that can be taken by your bank when evaluating vendor relationships and systems.

Begin by understanding your contract. Your contract is your owner’s manual that describes your rights and responsibilities with your vendor. Unfortunately, some are needlessly complex. It may be worthwhile to have your bank’s counsel explain the legalese to better understand your bank’s rights and responsibilities. Does the contract have service and support performance standards? Is your bank monitoring these? Are there remedies for non-performance? Do you periodically discuss vendor performance attainment with your vendor? If your present contract does not contain performance standards for operational and service quality and remedies for non-attainment, add that to the list to be negotiated with your next renewal. Do you understand your responsibilities at contract renewal? What are the expiration notification requirements? These important details are essential to protecting your bank.

Have you discussed with your core vendor what the bank’s expectations are for service, support and account management? So few banks have this discussion. So few vendors ask. Client satisfaction surveys do not provide satisfaction; they only measure it after the fact. There has to be alignment between the bank’s expectations and the vendor’s ability to meet them. Unless your bank’s expectations are clearly articulated, the vendor’s ability to meet expectations is left to chance. At the same time, ask your vendor for their recommended best practices for being a satisfied customer. What steps do they recommend to achieve the highest level of satisfaction?  Is your bank doing everything it can to be satisfied? 

Does your vendor know and understand your bank’s strategies and goals? If they haven’t asked, tell them. This dialogue is essential. Many vendors talk about being strategic partners, yet so few understand their clients’ goals and objectives. All banks are not the same. Vendors should craft solutions that fit your bank’s needs and that support its strategies. Supporting your goals and objectives and managing the deployment of technology to meet these unique goals is essential to becoming a strategic partner. Your expectations should include an annual executive discussion on your strategic goals and the vendor’s ability to support them. 

Schedule periodic meetings with your vendor to discuss specific topics of interest or current needs. Enlist a committee, representing all internal departments, to engage in this discussion and interaction with your vendor. Create a meeting agenda and provide your vendor with enough time to prepare adequately. All parties should agree on next steps at each meeting and follow up with a written action plan. 

Unfortunately, sometimes technology does not run well by itself. In order to perform effectively, it requires the interaction of both your vendor and your bank to truly achieve its greatest benefit. Don’t assume your vendor knows what your bank needs, tell them. In short, take ownership of the relationship. While it is a shared responsibility, there is too much at stake for your bank to be passive. With the ever-declining number of bank charters, every vendor should strive to achieve the highest level of satisfaction at every bank…including yours. 

Stephen D. Heckard is managing director of technology solutions for Austin Associates, LLC. He can be reached at 219-246-2300 or

Unauthorized reproduction of all or part of this material without the express written consent of the author is strictly prohibited. All rights reserved.

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