Is Vendor Management Becoming a Roadblock for Credit Unions?

Every day there seems to be a new tech solution that would be the perfect addition to the robust arsenal that is providing banking services to credit union members. On top of that, credit union lenders are also competing with outside giants like Rocket Mortgage – and struggling to keep up. Although finding the right vendor can be an arduous task, it is necessary for credit unions that want to stay competitive. Between the research, vetting and figuring out the logistics of partnering with the vendor, the process is time consuming and often costly. This creates a challenge for financial institutions that want to add new offerings of innovative products or services while also remaining profitable.

Vetting the Vendors

With every new solution a credit union is looking to add or replace, the process starts with the task of researching and vetting the vendor. While this may seem like a simple task, there is no such thing as an Angie’s List or Yelp for vendors. Credit unions are left to Google and hearsay from others in the industry. Between the searching, vetting and interviewing process, selecting a vendor takes time away from the decision makers who should be spending their time focusing on the credit union’s members and operations.

Data to Simplify the Process

Figuring out the right technology and vendor for your credit union can take months of research, planning and due diligence. Many credit unions do not have the luxury of time and resources to handle such a task. For this reason, credit unions should partner with tech companies that can manage the process for them by providing information they are looking for and bringing transparency to the vendor selection process.

By partnering with a tech company to manage researching and selecting a vendor, credit unions can get access to key information and data about a vendor like its pricing structure, performance and more from multiple sources. It is ideal for a credit union to know what it’s getting into by incorporating a new system into its banking options. With such information from the tech partner, credit unions can see how quickly the vendor works and the costs associated with incorporating the technology offerings, which saves time and money overall for the credit union.

Having access to vendor data also allows credit unions to take a look at how their current vendors are performing. This allows credit unions to decide whether the solutions they currently have suffice or if it is time to make a switch. While switching technology is not the easiest task in the beginning, the credit union will be able to see from the data points how helpful the vendor is, as well as if the end results provide a better service to both the credit union and its members.

Making the Most of Minimal Resources

Selecting a vendor can be an arduous task, especially for smaller financial institutions that do not have access to additional resources to handle such a mission. Credit unions in particular can often struggle since there may not be extra funds or hands on deck that are required for a search and implementation.

This process can unfortunately be a deterrent for bringing on new, innovative solutions and offerings for members, and can hold credit unions back from replacing current vendors that may not have the optimal services.

To put things into perspective, let’s look at lending for example. A vendor may promise to deliver credit union property reports within a couple of days but end up taking four to five. The credit union is then at the mercy of the vendor, which slows down its entire mortgage lending business process. While the report hold-up, which leads to inadequate member service, is a nuisance to the credit union, the institution may still fear the process of switching to another vendor. Between the integration process, and search and research that must take place prior to the integration, it can be overwhelming. The credit union may at times believe its current situation is better than integrating a new and better solution.

Another concern for credit unions is regulatory compliance. A vendor that may not be up to standard can cause a lot of issues on the back end. Credit unions must be able to change to a vendor that can meet its guidelines, and keep both the credit union and its members safe and compliant.

While the process of selecting, implementing and managing vendors can be tricky at times and appear time consuming, partnering with a technology company that handles the process for the credit union could enable it to implement new offerings, and work with new vendors that not only free up time for their day-to-day tasks, but also help them compete with outside lenders. Having a partner that tracks performance of vendors and gives the credit union insight into the vendor frees up time and manpower. Credit unions need a “one-to-many” connection, in which they are able to access multiple solutions rather than just one, analytics of underperforming vendors and inclusive due diligence. By allowing more transparency and working with the right tech partner, credit unions can improve their offerings with ease.

Tim Smith is Co-founder and Chief Revenue Officer for FirstClose. He can be reached at 512-717-9441.