Bank CIO’s mission: Getting out from under bad tech vendor contracts
HarborOne Bancorp realized it needed a chief information officer last year after a series of acquisitions tripled the moving parts in its tech infrastructure.
Stepping into the role at the Brockton, Mass., co-operative bank was Brad Goedken, a veteran executive of several large banks including Bank of America and SunTrust, who started two weeks ago by sorting out the $3.7 billion-asset company’s tech vendor contracts.
Though he’s just begun, Goedken is diving deep into the bank’s business, meeting with the IT team, getting to know the bank’s core provider and considering where automation and data analytics might be applied in the bank. But unlike at his past banking posts, the small institution is somewhat at the mercy of its vendors, and Goedken is figuring out how to give its contracts some teeth.
“While the big banks have their objective, these vendors want more business and there is value in them serving banks at all levels and scales,” Goedken said. “I want to negotiate service level agreements so that when a system is down and our bank’s customers are impacted, the check that I write them gets decreased.”
The complexity of bank technology vendor contracts is at an all-time high, said Paul Schaus, founder and CEO of CCG Catalyst.
For some contracts, Schaus has to negotiate 200 to 300 more terms on behalf of the bank. For a community bank, average contract sizes are 140 to 160 pages while big banks have contracts that are thousands of pages long.
Since smaller institutions are more reliant on vendors, community banks especially should consider what terms should be negotiated aside from price, including people, processes and management, Schaus said.
“The first lie in negotiations is that it’s a partnership,” Schaus said. “It’s not a partnership, it’s a business relationship.”
Goedken will be reviewing HarborOne’s vendor agreements and applying what he’s learned in previous roles at bigger banks, including as chief information officer with the SunTrust, Capital One and Bank of America mortgage businesses and Citi in auto finance. He was also a senior vice president and head of origination technology at Wells Fargo.
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