A Financial Institution’s Comprehensive Payments Evaluation Proves Size Doesn’t Matter
Nature of Partnership: Payments Evaluation
Asset Size: $800+ million
Headquarters: California
Branches: 4
The Financial Institution yielded significant savings, including reducing monthly processing costs by over 50%.
Background
Many financial institutions are re-evaluating their approach to card processing, opting to transition from full-service third-party providers to in-house solutions. This shift is often motivated by the desire to gain more control over operations, reduce processing costs, and increase profitability. While some institutions mistakenly believe that this is an option only available to larger businesses, this financial institution's experience demonstrates that those of any size can successfully bring card processing in-house, driving both innovation and growth.
Located in California, the institution has assets of more than $800M. Continually seeking new ways to deliver exceptional solutions that meet the needs of the community, personalized and innovative service drives their mission to empower people along their financial journey.
In early 2023, as the institution's card processing contract was nearing expiration, executives at the company recognized the need for outside guidance to navigate the complexities of the renewal process. After learning about Engage fi’s extensive knowledge in the payments industry, the institution made the purposeful decision to partner with the consulting firm. This collaboration would allow them to leverage specialized insights in their card brand, credit/debit, and payments network agreements, while evaluating their approach to card processing.
"We started the process with Engage fi in hopes of gaining a little insight into the card contract renewal process; however, we began to learn and discover the opportunity to change and build it as a financial institution core strength. We went far beyond negotiating prices and began our transformative journey in cards and network programs to make it a competitive advantage for the institution and our customers. We clearly could not have developed the strategy without the help, expertise, and partnership of Engage fi."
President & CEO
Solution
The initial phase of any project undertaken by Engage fi is a comprehensive discovery process, during which the consulting firm takes the time to actively listen and conduct an in-depth analysis to fully understand the goals and needs of the financial institution. This approach ensures the project progresses smoothly, remains on schedule, and consistently exceeds expectations.
During the discovery process, the financial institution determined that it was essential to not only evaluate their card processing but also to examine their network and brand partnerships. They recognized the need to view payments holistically. This broader perspective allowed the institution to strategically optimize its entire payments framework, aligning with key goals, improving operational efficiency, and enhancing customer satisfaction. Engage fi worked closely with them, guiding them through the process of issuing RFPs to vendors for each component of the payments project. After thoroughly examining the card processing vendors available to them, the institution’s leadership considered their options, leaning toward adopting a self-service model. However, given their limited staff size and the complexities of managing card processing in-house, the broader team expressed reservations about this approach. Recognizing these concerns, Engage fi stepped in to provide education on both the challenges and opportunities associated with self-service versus full-service solutions. To eliminate confusion and facilitate informed decision-making, Engage fi offered valuable insights and resources for successfully implementing this initiative. This included guidance on necessary hiring and training strategies to ensure operational readiness and long-term success.
Despite the financial institution’s initial concerns about the self-service model, Engage fi remained confident in its feasibility and believed the institution could successfully implement it. To build confidence and provide real-world support, Engage fi facilitated a connection between the institution and another client—an even smaller company that had successfully navigated similar challenges. This connection gave the financial institution valuable insights and firsthand knowledge from a peer organization.
After completing the comprehensive evaluation process, the entire team was fully aligned and excited to move forward with the self-service option.
Once the card processing decision was finalized, the Engage fi team shifted its focus to evaluating the institution’s card brand and payments network partnerships. One of the most important things to the institution was improving the level of service they received. Due to their size, they felt their current card brand partner was not providing the same quality of service provided to larger institutions. Through a comprehensive evaluation and RFP process, the team engaged in meaningful discussions to explore solutions that would better support the financial institution’s service needs moving forward. This ensured that the company would have a partner capable of meeting their expectations and fostering long-term growth.
Finally, after all vendors were selected, Engage fi took the lead in managing the contract negotiations to secure the best deal and most favorable terms and conditions. Their expert guidance ensured that each agreement reflected not only competitive pricing but also the highest level of service, specifically tailored to the institution’s unique needs. This careful oversight helped guarantee long-term value and alignment with their strategic goals.
Results
The financial institution signed new brand and network contracts and successfully transitioned their card processing from full-service to self-service with the guidance from Engage fi.
Their new contracts yielded significant savings: monthly processing costs were reduced by over 50%, ATM fees were dropped by 68%, and volume and growth-based incentives increased by 151%. The institution highlighted that this project delivered the most significant cost savings they have ever achieved across any contract within the organization.
The education and insights provided by Engage fi were invaluable, enabling the financial institution to thoroughly evaluate each vendor option and secure substantial savings through strategic contract negotiations. Furthermore, the institution’s customers will benefit from improved service and expertise, allowing the business to attract top talent as they enhance their offerings.
The institution's experience illustrates that with the right insights and guidance, financial institutions of any size can successfully transition their card processing to a self-service model, unlocking greater efficiency and control.
This transition not only empowers them to reduce costs but also enhances their ability to tailor services to meet the unique needs of their customers. By taking a proactive approach to evaluating their payment solutions, the financial institution has positioned itself for sustainable growth and improved customer satisfaction. The shift to self-service processing has provided them with greater flexibility to adapt to changing market conditions and customer preferences, ensuring they remain competitive in an evolving financial landscape.
Ultimately, the institution serves as a powerful example of how leveraging expert consultation and strategic planning can lead to transformative outcomes. With the right support, financial institutions can enhance their operational capabilities, improve service delivery, and foster a stronger relationship with their customers, paving the way for future success
In the Numbers
Monthly processing cost reduction by over
50
%
Monthly credit processing cost reduction by over
72
%
Monthly debit processing cost reduction by over
57
%
Card production costs decreased by
49
%
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