Bank’s Comprehensive Contract Renewal Unlocks Substantial Savings Through Strategic Negotiations
Nature of Partnership: Contract Renewal
Asset Size: $340+ Million
Headquarters: Manhattan, Kansas
Branches: 2
Community First National Bank’s new contract yielded significant savings including a 16% reduction in core processing costs.
Background
In today's dynamic financial landscape, banks face mounting pressure to maintain their competitive edge while swiftly adapting to their customers' evolving expectations. A critical component of this challenge lies in effectively managing relationships with key vendors, especially those responsible for the bank's core operational systems. These partnerships are increasingly vital, as they often determine a bank's ability to innovate, streamline processes, and deliver cutting-edge services that align with modern consumer demands.
Facing a complex vendor renewal in 2023, executives at Community First National Bank quickly surmised that renewing their core banking system, debit processing, network partnership, and digital services agreements would require specialized external expertise. However, to fill the bank’s mission to, "focus on building and sustaining long-term, generational relationships,” they sought a partner with a keen understanding of the complex vendor landscape who excelled in negotiation strategies and could ensure that contract terms aligned with Community First’s vision and long-term goals.
After engaging with Engage fi’s team of specialized advisors, bank executives recognized the consulting firm’s unique experience in negotiating vendor contracts from both sides of the table as a significant advantage. This dual perspective provided the transparency necessary to secure optimal pricing and terms, ultimately creating value that could be passed on to customers, the community, employees, and shareholders. Coupled with Engage fi’s domain-specific expertise, this capability became a critical differentiator, setting the firm apart from other consulting organizations.
Solution
From start to finish, Engage fi followed a thorough and methodical contract renewal process. The team worked collaboratively with the bank to establish comprehensive project goals, including a vendor support network with swift resolution and technology systems to enhance the employee and customer experiences. To ensure optimal system performance, periodic operational reviews were established as a requirement. Additionally, the vendor was expected to provide affordable solutions tailored to support the bank's future growth.
Once goal alignment was achieved and evaluation of the current state of services and pricing concluded, Engage fi gathered Community First Bank’s requirements to solicit a Request for Proposal (RFP) from vendors and schedule product demonstrations. After selecting the most suitable vendor, Engage fi conducted thorough vendor due diligence and negotiated contract terms on behalf of Community First Bank. The team also validated the final contract pricing and services to ensure they met the negotiated terms.
"Engage fi has an outstanding team of extremely knowledgeable experts who helped turn a daunting contract renewal into a seamless step-by-step process. Every member of the team provided valuable information and recommendations on specific contract and renewal questions, and we often looked forward to our productive calls with the team. Engage fi was able to negotiate a substantial amount of savings for our extensive contract renewal, and we would highly recommend other financial institutions work with them on contract reviews and negotiations. We could not have asked for a better experience!”
Crystal McMahan, Retail Operations Manager
Outcomes
Community First National Bank signed a five-year renewal contract with the selected vendor for core account processing, digital banking, debit card processing, and debit network service. The new contract yielded significant savings, achieving a 16% reduction in core processing costs and a 21% reduction in debit processing costs compared to the previous contract. Additional incentive savings were also included. Due to the significant savings achieved, the bank invested in additional products to expand their product suite, improve the customer experience, and streamline operations for efficiency.
One of the biggest things that stood out to Community First during this project was the thorough review of all contract terms and existing invoices, particularly those involving specific line items which the bank needed help learning more about. The bank also appreciated the consulting firm’s fresh perspective, introducing innovative ideas and proposed solutions the bank had not previously considered.
Community First National Bank was particularly impressed with how Engage fi rigorously held the vendors accountable throughout the process. The firm’s streamlined approach allowed the bank to concentrate on its day-to-day operations, while Engage fi worked behind the scenes to secure the most favorable terms, conditions, and financial savings.
Engage fi’s meticulous approach to reviewing vendor contracts and ensuring alignment with Community First’s goals, coupled with their commitment to holding vendors accountable, significantly contributed to the success of this project. The bank gained not only clarity and control but also benefited from Engage fi’s extensive expertise. This project exemplifies how thorough oversight and strategic guidance are imperative for achieving both savings and operational excellence in contract renewals.
Results
16
%
Reduction in Core Processing Costs
21
%
Reduction in Debit Processing Costs
"It was important for us to partner with a team that understood banks.”
Kevin Wagner,
SVP/Controller
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