Credit unions, in increasing numbers, are closing branches, laying off employees and freezing scheduled projects. Unlike the banking industry, credit unions are trying hard to maintain respective employee rosters by moving positions around and placing a hiring freeze. Despite best intentions, however, these traditional approaches are not working as the economy continues to regroup. A new approach is needed.

It’s no longer affordable or feasible for credit unions not to seek out current market pricing upon renewal of all contracts. On the technology front this is often a muddied practice. When effectively executed, an experienced outside expert can save a credit union hundreds of thousands, possibly millions, of dollars over a period of one to five years.

After successfully mediating countless vendor re-negotiations on behalf of credit unions, a successful consultant understands that a progressive, transparent approach lays the ground work for a positive relationship moving forward. Conversely, without oversight and acquired knowledge, credit unions that undertake re-negotiations without expertise lay the foundation for an unpredictable and possibly negative long-term relationship.

Consider a vendor contract for a credit union’s Internet banking provider. Without proper knowledge and oversight, how can a credit union determine the appropriate user fee structure? Should it be per user fee, or per active user fee? The answer gives light to another question: how is an active user defined, and how does a credit union achieve the most favorable pricing based on factual market data?

To answer the aforementioned questions, reduce costs and increase revenue optimization, credit union executives should: 

  • Consider all tactical aspects of the engagement (both short and long term).
  • Consider all service-level aspects of the engagement.
  • Consider other key relationship aspects of the engagement.
  • Conduct an annual exhaustive audit process of all existing technical applications and contracts.
  • Negotiate terms to reflect current market pricing.

Credit unions must remove their blinders and focus on saving valuable money and resources. In this volatile market, there is opportunity to negotiate and arrive at favorable terms – perhaps better rates than before the recession took the economy hostage.

Sabeh Samaha is a consultant with Samaha & Associates in Chino Hills, Calif.