As a small, family-owned financial institution, you are at a crossroads in determining the best approach to new vendor management regulations that have been passed along by the Federal Deposit Insurance Corporation. Like most small and growing banks, your organization may be an important partner in a rural or small local community that depends on a strong financial partner to make it through tough economic times. As a result, it is more important than ever that your contract management efforts are effective and efficient. There are typically two options for tackling this situation, a manual, paper-based system or the acquisition of a software-based solution designed specifically for companies that require compliance with the Federal Deposit Insurance Corporation or Office of the Comptroller of the Currency regulations. Regardless of the solution you pick going forward, there are really several main areas of compliance you should strive to keep track of. The following overview provides several areas to begin concentrating on. While these are by no means comprehensive, they can provide you with a starting point as you begin a process of checks and balances.
1. It is imperative tobegin a needs and services relationship only after performing proper due diligence as applicable. Do not fail to thoroughly investigate the hopeful partner. While risk factors are inherent in any situation where you are going into a business venture with others, minimizing the risk is of key importance. A thorough analysis of your provider will give you a basis for building a productive work relationship with them.
2. It is also important to perform a significant risk assessment of each and every source who will be providing goods and services to your financial institution. This should include essential service providers such as those related to ATM maintenance, POS providers, and even your janitorial company.
3. It is a valuable exercise to make sure that you have the tools necessary to consistently review and supervise all the relationships which you are maintaining for your institution. It is suggested that reviews take place annually and that good record keeping is maintained throughout the course of the year. Often times, sales agreements with goods and service providers are set up on a yearly basis. When it comes time for agreement renewal negotiations, consider performing a thorough review at the same time.
Being a solid and successful bank, particularly in a small and rural community is a great opportunity. You are an integral part of your community and you work hard to build the trust and respect of those who are your clients. Doing your very best to develop exemplary working relationships with all the companies you outsource with for services is a responsibility which should be looked upon seriously. By completing the due diligence process, by performing necessary risk assessments, and by conscientiously and consistently reviewing your relationships with service providers, you are setting yourself up to be an institution that is in complete compliance with all rules and regulations and one that is able to provide top notch service to all its customers.
