I was very fortunate when I worked in a bank; I generally always got the support and investment that I needed to run a third party risk management program.
Talking to my colleagues throughout the industry, I know that I was perhaps the exception, not the rule.
I’ve heard stories of third party risk managers and compliance managers who practically sounded alarm bells asking for more people, more help, more expertise, more investment in the process or technology and they didn’t get it until an audit report criticized them.
Vendor management is a strategic advantage
As you’re thinking about your strategic plans or budget, please don’t think only about marketing, advertising and the front office. Think also about those areas that don’t make you money – yes, vendor management is an expense – but they are also your best offense against a real weakness in your company. Done right, vendor management is a true strategic advantage. It can deliver:
1. Cost savings by identifying opportunities to reduce redundancy
By having a good vendor management program, you can identify and perhaps eliminate the duplicate use of vendors by different lines of business; if there are several vendors providing the same service to the financial institution in different areas of the company, perhaps you can consolidate and drive a better price as well.
2. Customer satisfaction by ensuring you’re working with high quality, reputable providers
Ongoing monitoring of service level reports is one example of how you can ensure you're working with high quality providers. Other methods include making sure the vendor quickly responds and fully resolves complaints, monitoring the news for any potential areas of concern and keeping tabs on their Better Business Bureau rating. Your reputation is tied directly to their performance.
3. A reduction of compliance headaches
You outsource almost every function but you cannot outsource compliance. The responsibility for compliance always falls back to the financial institution, so you need to keep close tabs on the compliance policies and how they are put into practice by the vendor.
4. Much more
From more satisfied customers to better exam results to a strong commitment to excellence, your institution benefits from a well run and highly organized vendor management program.
Make sure you have the necessary resources
So, from an experienced vendor manager’s point of view, do me a favor – actually do yourself a favor, wander over to your vendor manager’s office, offer them a cup of coffee and an opportunity to talk about what they need to do the job more effectively and efficiently.
It may be people, it may be technology, it may be outside assistance… but whatever it is, encourage them to ask and then respectfully consider. You’ll be glad you did. And, so will your customers and your board.