4 Steps To Vendor Selection Success

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4 Steps To Vendor Selection Success

Uncovering the Right Core Processing System for Your Financial Institution

Choosing a core processing system and vendor for your financial institution is a critical and complex undertaking.  The decision you make impacts every business unit of your operations.  Even more, making the wrong decision can hurt your ability to grow, meet your customers’ expectations and strategic business objectives.  Basically, this one decision may be the most import decision for your financial institution, so proper research and planning can be your best guide.
Cost savings and improving efficiencies is a priority, so you need a vendor that offers a viable, cost-effective proven system that provides you with optimal service, increased customer flexibility and service, and reduced costs. Before you dive in, consider these three key elements to determine the right core processing system:
Step 1:  Determine your needs, goals and future business strategy
Begin by establishing a clear and consistent understanding of your key business objectives and most critical issues.  Collect as much information from your team to understand your current business environment, contracts and cost structures, service expectations, future needs, and any issues that you have currently with your vendor.
Step 2:  Evaluate your internal capabilities, technologies and tech-savvy staff 
Consider how a new system aligns with your goals and how it will address specific challenges. Review the benefits and drawbacks of an in-house system as well as an outsourced solution.  With your IT staff, pinpoint your most critical IT and data security issues so they can be addressed in the request for proposal stage.
Step 3:  Select a Set of Core Vendors to Provide a Proposal
Choosing the right core vendor for your bank’s specific needs is a matchmaking process — not just a search for the best technology product, but for the best service provider to deliver it. As in any partnership, there are key issues to consider like, do the management philosophies of the bank and vendor align? Or will the vendor still be in this particular business five years from now? Be sure to consider financial health and stability of the vendor, installation and integration support, training, maintenance agreements, upgrade and, perhaps most important, enhancement policies, customer service reputation and the obvious cost considerations.
Step 4: Request for Proposals and Due Diligence
An RFP outlines the requirements and expectations you explored in the evaluation phase. It is a critical communication tool for the vendors that you include in the selection process.  Clearly define your selection criteria, goals and expectations. This will give your vendor the ability to provide the best proposals. Responses to your RFP should be analyzed carefully to determine if they meet your business objectives, pricing expectations, and functional requirements. After studying the proposals, narrow the list of potential vendors to a short list of final candidates, no more than two or three. From this point forward, any vendors not on the short list should be excluded from further consideration.
Step 5: Contract Review and Negotiation
A well-negotiated contract is an important tool for ensuring a long-lasting relationship with a vendor. Once you make your choice, the pricing, service level agreement and contract terms are negotiated. In the process of finalizing the contract, be sure to consider such issues as: payment of fees, costs and expenses, conversion and implementation assistance, training prior to and following implementation, system enhancements, and notification of upgrades and changes. Have contractual warranties documented and service level agreements clearly documented.
21CFS Offers a Competitive Advantage
21CFS is a top provider of data processing solutions, BSA and AML compliance and check imaging exclusively for community banks. Our team consists of former bankers and technology experts, so we know how diligently you work to provide exceptional customer service in today’s heightened regulatory environment all while promoting the well-being of your community.
Our team integrates the best solutions for banking functionality and operates the combined suite of applications from its state-of-the-art data center in Austin. Our team is committed to supporting the community bank market by delivering “big bank” technology solutions at an affordable price. When it comes time to evaluate your core vendor, call us to start the process.
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