Do You Need a Vendor to Manage Your Vendors?

In the words of Bob Dylan, “The Times They Are A-Changin’.” 

It may sound a little cliché, but it’s so very true in the credit union space.  Even before the COVID-19 pandemic, we were in the throes of significant changes.  Now, almost a year later, we face cyber-security threats, competition from inside and outside of our industry, and the regulatory burden for small- and medium-sized credit unions intensifying every day.

In fact, it seems like the NCUA has increased its oversight of vendor management programs. A handful of credit unions have reported that NCUA examiners are paying particular attention to vendor management and outsourcing processes. While some credit unions have said that examiners are paying specific attention to IT vendors, it appears that many other vendor arrangements are getting extra scrutiny.

The risk associated with vendors, especially critical vendors like core data processors and mobile banking providers, is of great concern to regulators.  The safety and security of your credit union and your members’ information depend on understanding those risks and managing them. 

Vendor Management requires a commitment and skills that are part sleuth and part sheriff. You either love it or hate it, but you HAVE TO do it.

Now, in the interest of full transparency, my team offers a Vendor Management program, so, even if I’m not one of them, I can personally attest that there are people that love to do it. If you fall into the ‘hate it’ category, here are some important reasons to think about outsourcing vendor management to an expert third party.

1. Mitigate risk (and the worry that comes with it)

Vendor management is being tasked to do more than ever before.  Overseeing every aspect of numerous vendor relationships isn’t just a significant challenge. It can present unnecessary risk and possible damage to your members and your organization if not done correctly. 

Understanding which vendors are critical (and which aren’t) can help identify where the risk lies and focus due diligence where you need it most.

Are you or your vendors:

• Successfully conducting sophisticated Business Continuity and Disaster Recovery planning, SOC Report Analysis, Regulatory Compliance, Financial Reviews, and Cyber Security reviews?
• Well-positioned to know and meet the requirements for all those documents?
• Well informed enough to ensure your vendors do their part to prevent you from losing money or leaking personal information?

Globally, companies and consumers have lost billions of dollars because of IT security breaches. But being able to gather the right information, properly analyze it, and contract the best vendors for your needs can eliminate unnecessary risk. 

            2.  Apply best practice expertise

Many credit unions are only devoting a sliver of their time and resources during the year to vendor management tasks. Likely, it’s no one’s full-time job, and it’s probably a task delegated to someone already ‘wearing a lot of hats.’ As talented as that employee might be, they’re probably not trained in vendor management or fully up-to-speed on what the regulators will look for during an exam. 

You need someone that’s trained on the latest issues and requirements for vendor management audits.  If you don’t have that person on your team already, engaging an expert resource will keep you current on best practices.

            3.  Save time and money

For many credit unions, this should actually be reason #1.

Talent, especially expert talent, is expensive. By outsourcing, you can pay a fraction of what it would cost for a full-time employee and still benefit from a high level of expertise.

And that’s not all. With an expert in your corner, you’ll be able to avoid the kinds of costly mistakes that can come from flaws in your vendor management process. 

At the end of the day, vendor management as a pay-as-you-go service is often the most economical approach. 

So, might outsourcing be the best solution for managing your essential vendors? Obviously, I’m biased, but if any of the points above have you interested in learning more, let me leave you with more food for thought.

No one knows credit unions like Credit Union People. Our Vendor Management specialists not only have the most current training in vendor management practices, they understand the credit union industry because they’re in it every day.

If you have vendor management software you like (or are still under contract to use), they can work with you to support what you’re already doing. If you haven’t found a solution yet, we can introduce you to our software partner, Tandem, and talk about how their software can fit your unique needs.

Ready to learn more? Click here to see more details and start the conversation.