Credit unions, in increasing numbers, are closing branches,laying off employees and freezing scheduled projects. Unlike thebanking industry, credit unions are trying hard to maintainrespective employee rosters by moving positions around and placinga hiring freeze. Despite best intentions, however, thesetraditional approaches are not working as the economy continues toregroup. A new approach is needed.

It's no longer affordable or feasible for credit unions not toseek out current market pricing upon renewal of all contracts. Onthe technology front this is often a muddied practice. Wheneffectively executed, an experienced outside expert can save acredit union hundreds of thousands, possibly millions, of dollarsover a period of one to five years.

After successfully mediating countless vendor re-negotiations onbehalf of credit unions, a successful consultant understands that aprogressive, transparent approach lays the ground work for apositive relationship moving forward. Conversely, without oversightand acquired knowledge, credit unions that undertakere-negotiations without expertise lay the foundation for anunpredictable and possibly negative long-term relationship.

Consider a vendor contract for a credit union’s Internet bankingprovider. Without proper knowledge and oversight, how can a creditunion determine the appropriate user fee structure? Should it beper user fee, or per active user fee? The answer gives light toanother question: how is an active user defined, and how does acredit union achieve the most favorable pricing based on factualmarket data?

To answer the aforementioned questions, reduce costs andincrease revenue optimization, credit union executivesshould:

• Consider all tactical aspects of the engagement (both short andlong 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 existingtechnical applications and contracts.
• Negotiate terms to reflect current market pricing.

Credit unions must remove their blinders and focus on savingvaluable money and resources. In this volatile market, there isopportunity to negotiate and arrive at favorable terms – perhapsbetter rates than before the recession took the economyhostage.

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