5 Common Technology Vendor Mistakes And How to Avoid Them
“Let’s talk to a few vendors and see what’s out there.”
With technology constantly advancing, such requests are being made on a more frequent basis at community banks. Like any other process, however, vendor engagement requires a strategic approach and keen attention to detail.
In this post, I’ll discuss five common tech vendor mistakes – and how to avoid them.
1. Not Asking for Enough References
So, the vendor you’re considering has a flashy website, a very responsive sales team, and dozens of online reviews. While this is certainly a great start, is it enough to make an informed decision? Probably not. Highly optimized websites and online demo videos aren’t all that expensive to produce. Sales reps aren’t the people you’ll work with after the ink dries. Online reviews, although interesting, can’t provide the full picture; they’re simply a snapshot of one specific user’s opinion (which may have changed since publication).
How to avoid this mistake: Ask the vendor to provide several banking references. Do your due diligence and set up brief discussions with each contact. If the vendor is unwilling to accommodate this request, warning flags should go up.
2. Forcing a Generic App to Work
Not everything used by your institution is banking-specific. For example, your bank probably uses many of the same scanner models used at law firms and medical offices. That’s totally fine. However, there are situations where a generic system or app simply doesn’t cut it. Loan imaging is the perfect example. Sure, you could theoretically use a generic imaging app to save and index documents. The downside, of course, would be a lack of account synchronization, document tracking, and reporting.
How to avoid this mistake: As you begin your search, give preference to suppliers that focus exclusively on the financial industry. If no such supplier exists, then expand your search to include vendors that serve a number of industries but offer a custom-tailored solution for banks. For recommendations, be sure to ask your colleagues on the CBANC community.
3. Integration Fails
Your bank already has an existing IT infrastructure, so any new applications should only enhance your technology footprint. Unfortunately, some technology providers design their solutions in a vacuum, forcing your IT staff to jump through hoops just to get everything to work right. As the vendor pushes out new patches and updates, it’s likely to break your homemade connectivity. This creates unnecessary work (and frustration) for your IT team, lenders, and back office staff.
How to avoid this mistake: Be upfront with vendors about your needs. Ask them about connectivity to your existing hardware and software. Ideally, they should be able to provide detailed support documentation about their interfaces. How many customers use the specific integrations that you need? Is the vendor willing to put you in contact with those customers? Does the RFP include the necessary implementation, training, and modules to make the integrations work?
4. Paying for Features that You Don’t Need
The software-as-a-service (Saas) model allows your bank to choose from a tiered feature set. Lower-priced plans offer fewer features, while higher-priced plans offer greater functionality. Sadly, some banking vendors have been slow to adopt the Saas pricing model, sticking only to a one-size-fits-all, asset-based pricing model. While asset-based pricing can be advantageous in certain situations, it may cause your institution to overpay for features it doesn’t currently need.
How to avoid this mistake: Ask vendors if they offer flexible pricing models. If you’re not ready to commit to a six-figure, long-term contract, inquire about a monthly plan. Don’t be surprised if most vendors will swiftly dismiss this idea. Don’t be discouraged – there are a lot of suppliers out there who would gladly work with you on pricing and billing.
5. Failing to Consider Future Needs
You’ve identified the perfect solution. The vendor offers a nice mix of features and a reasonable pricing model. Before you sign on the dotted line, be sure to consider your future needs. The last thing you want to do is sign up for a platform that isn’t scalable.
How to avoid this mistake: Study all the plan levels offered by the vendor. If your bank doubled its number of users and/or asset size in the next five years, would another plan suffice? How difficult would it be to migrate from your current plan? Is there a penalty or implementation fee for upgrading?
Thinking about the future now could save thousands of dollars later.
CBANC would like to thank Alan Woodridge from AccuSystems, LLC for his contribution to our blog.
About Alan Wooldridge:
Alan Wooldridge is the President of AccuSystems, LLC, a bank technology and software development firm serving more than 14,000 bankers worldwide. To learn more about AccuSystems, visit https://www.accusystem.com.