Pub. 4 2013 Issue 2

summer 2013 25 CherylBuntin isaSeniorVicePresidentwithAaSysGroup and has worked with Community Banks for over 17 years. AaSys Group provides onsite and remote network sup- port, technical guidance to meet security and regulatory mandates, and operations assistance with core contract evaluationsandcontractnegotiations.Ms.Buntinmaybe reached at (813) 309-4482 or cbuntin@aasysgroup.com There comes a time when all bankers must deal with contract negotiations and renewals. For most banks, data processing fees will be included in the top three yearly expenses. S o, if you have to face the inevitable, you might as well get the most out of it! Here are several recommenda- tions that AaSys has learned through our years of negotiating competitive contracts on behalf of our clients. 1. Ask that all core and ancillary banking application contracts be coterminous. IF you use multiple vendors and have adopted products at various times, this is no mean feat. Keep in mind that you hold the balance of power (until you sign that contract), so work hard to ask for renewal dates that match your other service agreements. You may have no interest in moving to other products, but who knows what the future will bring. (In 2008, did any of us know we were hurdling off the financial cliff?) If your institution is ever faced with needing to make a change and should your contract expiration dates be spread out over many years, you may be faced with years of conversion activities. 2. If there are new products from your core vendor that you might be interested in during the first several years of your new contract term, negotiate the fees with your core and stipulate future implementation dates. Additionally, request that Contract Negotiations and Renewals Cheryl Buntin, Senior Vice President, AaSys Group the bank not be charged if your plans change and you decide not to move ahead with those products. In other words, lock down your pricing while you have the most leverage. If you wait until after your new core contract is signed, it is typical that you will receive list pricing for new services. Negotiate new services and products when you have the most leverage - when you are negotiating your core contract. 3. Ask that the term of your new service agreement be no more than six years. Your vendor will ask for longer terms, and you will be their new best friend if you agree to a longer contract. Additionally, you will be given attractive incentives for longer contracts. In today’s world, those incentives will be nice. But don’t forget how fast technology changes. If you had signed a ten year agreement in 2003, that agreement might not have included branch capture. It would not have included remote deposit capture, mobile banking, and P2P payment systems. This means that your bank would have paid list price – with no significant concessions – for those services. So that great deal that you would have gotten 10 years ago might not be looking so great in today. 4. Don’t forget about training for your employees! With data processing fees being so significant, you will want your staff to know how to efficiently and correctly use the technology. Banks pay hundreds of thousands of dollars for the newest technology that will give them the edge over their competitors. Make sure your employees know how to use that technology. Contract negotiations are an excellent opportunity to enhance the solutions used by the bank and to control costs. Don’t waste that opportunity! Q