5 minutes
Make sure you’re clear on your business objectives and current capabilities before you begin searching for a new solution.
Technology is a vital component of any financial institution’s success. However, choosing the right technology vendor system for your credit union can be a daunting and complex task. That’s why it is important to make some key decisions before you start the vendor selection process.
Here are the top five decisions you should make before going into a technology vendor system selection for your credit union:
1. Define your business objectives and strategy.
Before you look for a new system or platform, you need to have a clear vision of what you want to achieve with the system and how it aligns with your overall business objectives and strategy. For example, do you want to improve member service, increase efficiency, reduce costs, enhance security or expand your product offerings? How will the new system support your growth plans, competitive advantage and regulatory compliance? Having a well-defined business case will help you identify your key requirements and prioritize them according to your needs and goals.
2. Assess your current technology environment and capabilities.
Another important decision you need to make is to evaluate your existing tech stack and capabilities. What are the strengths and weaknesses of your current system(s)? What are the gaps and pain points that you need to address? How well does your system integrate with other systems and platforms? How flexible and scalable is your system to accommodate future changes and demands? How reliable and secure is your system to protect your data and transactions?
By conducting a thorough assessment of your current technology environment, you will be able to determine what you need to keep, change or replace in your new system. This is a good exercise to do internally before you look at potential new vendors.
3. Decide on the type and scope of the technology vendor system.
Once you have defined your business objectives and assessed your current technology environment and capabilities, you need to decide on the type and scope of the new system that best suits your needs. For example, do you need a core processing system, a customer relationship management system, a digital vendor, contact center solution or a human capital management system? Do you need a horizontal system that covers multiple functions and processes, or a vertical system that is specific to your niche? Do you need a cloud-based system, an in-house system or a hybrid system? Do you need a comprehensive system that provides end-to-end solutions, or a modular system that allows you to select and customize the features and functions you need?
By deciding on the type and scope of the technology vendor system, you will be able to narrow down your options and focus on the most relevant and suitable vendors. The features available in many types of the systems today are consistently improving, so you must know what you want when you start this process.
4. Determine your budget and timeline.
Another crucial decision you need to make before you start the vendor selection process is to determine your budget and timeline for the project. How much can you afford to spend on the new system, including the initial purchase, implementation, maintenance and upgrade costs? Is the timing correct? Do you have to pay deconversion fees on the software? When is the next contract? Are all the technology contracts co-terminus? How long do you have to complete the project, from planning to testing to implementation? How will you measure the return on investment and the benefits of the new system?
By setting a realistic budget and timeline, you will be able to manage your expectations and resources, as well as negotiate with vendors more effectively. The timelines with the big core and digital vendors are extending negotiations, so if you are about three years away from your expiration date, now is the time to start the process.
5. Hire a vendor selection consultant.
Finally, a critical decision you should make before you start a technology vendor system selection is whether to hire a technology vendor selection consultant. A vendor selection consultant is an expert who can help you with the entire process of choosing the right technology vendor system for your organization. A consultant can provide you with many benefits, such as:
- Envisioning the future. A consultant can help you assess current and future business needs, compare your needs to industry best practices, and understand how the new system can support your objectives.
- Focusing on key issues. A consultant can help you build your requirements list and focus on the project so the community credit union executive can focus on the day-to-day work at the branch/office.
- Saving money and time. Consultants will help you save money through their negotiations with the vendor and time by screening and their knowledge of vendors. Remedy Consulting has a “price repository” where they compare your Fis technology rates compared to previous negotiations and tell you where you are on the price curve for technology software and services.
- Avoiding costly mistakes. Avoid mistakes by working through the consultant who will identify risks and challenges and provide solutions and recommendations. Consultants know the market curve and market pricing.
- Leveraging best practices and tools. A technology consultant can help your credit union with best practices and tools for system selection. Plus, they will be running the meetings, not you, so your time is spent on other tasks. Consultants can help you understand industry benchmarks, vendor matrices and scorecards, etc. A consultant will provide multiple milestone reports throughout the process.
By hiring a vendor selection consultant, you can ensure that you make the right decision for your technology vendor system selection and achieve the best results for your community financial institution.
Technology system selection projects can take months to complete, even with a consultant that is watchful of the timeline. Always add a few extra months into your timeline to ensure it is complete ahead of the window of negotiations so you can leverage some power over the vendors.
Karen Lowerr, PMP, MBA, is the director of operations at Remedy Consulting and producer of BankTalk Podcast. Remedy Consulting helps financial institutions thrive through specialized consulting services in system selections, core contract negotiations, outsourcing/in-house advisory, FI mergers & acquisitions, and FI strategic planning. As a trusted advisor to community financial institutions, Remedy Consulting has executed over 700 system selection and vendor negotiations since 2016. To learn more, visit www.remedyconsult.net.
