Banks and credit unions routinely rely on third-party vendors to process transactions, protect their computer and data systems, service their ATMs, consult on banking operations, and much more. The process of outsourcing allows bankers to focus on their core business operations and the services they provide, while leaving things like ATM management, cybersecurity, and other functions to businesses that specialize in these operations. To save costs and improve performance, you may be wondering if there’s an advantage to outsourcing your banking services to multiple vendors – in this article, we’ll explore the benefits of doing just that.
Multi-Vendor vs Single Vendor
The old saying about not putting all your eggs in one basket can also apply to your relationships with vendors. Relying on one vendor for all of your needs gives them the upper hand when it comes to negotiating on prices. If there was only one grocery store in your town, there wouldn’t be much of an incentive for the owners to keep their prices down. Having multiple stores drives competition and encourages each business to remain competitive.
Of course, not every vendor can fulfill all the needs of your bank. You might use one provider for your ATM management, while a different company provides armored transport, and a third handles your branch security. That’s why choosing a robust, multi-solution vendor is ideal. At Shields, many of our customers start out by hiring us for one part of their banking operations, such as ATM service or cash transport. Once they see the level of excellence we provide, they start to increase our role as a vendor.
We were the nation’s first provider of ATM service and Cash Replenishment as a single solution, and we’re the mid-Atlantic’s leading provider of ATM servicing, as well as Interactive Teller Machines, Teller Cash Recyclers, cash transport, branch design, and furniture.
Even if you already have a provider for one or more of these needs, they may not have our level of expertise or the broad range of services we offer.
Improve Your Security
Banks, credit unions, and other financial institutions are frequent targets of computer hackers looking to steal customer data and gain access to their funds. The cost of dealing with a data breach can be expensive, with significant fines and legal costs—on top of the damage it could do to your reputation.
By relying on more than one vendor to offer advice and protect your data management systems, you can have multiple layers of data protection. For example, at Shields, we are a SOC 2 certified vendor offering state-of-the-art security standards. This builds on our long-established reputation for excellence in customer satisfaction.
Draw from a Larger Talent Pool
Think of the many projects and business operations at your bank that require the involvement of multiple people. They can brainstorm on different approaches to solving a problem, or the best way to offer a service, while also benefiting from each other’s input and skills.
The same is true when it comes to vendors. Each vendor for your bank might have their own unique abilities and perspectives. With multiple vendors, you can draw from a much larger talent pool and consider a wider range of solutions for any problems you face.
Working with multiple vendors also gives you a chance to see how well they perform. For example, Shields has a 99% on-time delivery rate for cash in transit services in the Northeast region.
This is higher than national armored transport providers and it’s an example of why we are a leading provider of ATM / ITM Service, Cash Replenishment, Cash in Transit sales and service in the New Jersey, Pennsylvania, New York, and Delaware financial community.
Stay Ahead of Trends
Each vendor that you do business with specializes in the type of service they provide. For example, a company that offers IT security and data protection must stay on top of any changes within the cybersecurity field. They’ll also be quick to implement any new changes required by regulators or to address new risks within the cybersecurity field.
As another example, a company that specializes in the printing and mailing of customer statements, or the creation and transmission of e-statements, can improve your efficiency because they specialize in this kind of service. They can also make sure you comply with applicable banking and customer data regulations.
We are the nation’s first provider to combine both ATM management and cash replenishment into one service, and our long history of working within this sector means we stay on top of regulatory changes affecting ATMs, cash handling, cash transport, and bank security. With Shields, we are always compliant with the latest regulations that impact our service to you.
How to Choose Bank Vendors and Mitigate Risks
When increasing vendor operations, it’s important to investigate each vendor your bank will consider using. Start by conducting a risk assessment, where you analyze the quality of services a vendor provides along with their reputation. Make sure that they’
You might also take a look at the many customer endorsements we list on our homepage, such as this one:
“Shields is always responsive, helpful and willing to take the extra steps that are sometimes necessary to get a project done correctly the first time. Their team’s experience and knowledge help to ensure installations go smoothly.”
Brian Brockson
Credit Union VP
Establish Oversight and Metrics
Before bringing on a new vendor, it’s important to designate the key people who will be a point of contact for each company who will provide oversight and make sure any quality controls are maintained.
It’s equally important that you establish the metrics by which a vendor’s performance will be evaluated, just as you would with your employees. You should routinely evaluate each vendor’s performance, to make sure they’re meeting the needs of your business, your customers, and regulators.
Have a Vendor Contingency Plan
One of the benefits of using multiple vendors is you can switch from one provider to another in case one of them is unable to fulfill their obligations or fails to perform as expected. Human error is inevitable and even if a mishap isn’t the vendor’s fault, you’ll still need a provider who can take over, just in case.
Check Their Security Protocols
We don’t need to tell you the importance of protecting your customer’s data, but it’s important to make sure that every vendor you do business with is as careful as you are.
It’s important to have reporting requirements and protocols in place so that, in the case of a data breach or theft of information, both your bank and the vendor will understand what’s to be done and how you’ll both handle notifying your customers and regulatory authorities.
Use Nondisclosure and Confidentiality Agreements
While the protection of customer data might seem obvious for banks and their vendors, there could be other valuable information about your bank that you’d like to protect. If you were thinking of offering a new type of loan, a money market account, or expand your customer services you might not want the competition to know about this ahead of time. No matter the type of access that a vendor’s employees have to your bank, there’s still a level of risk involved.
That’s why written nondisclosure and confidentiality agreements are important to have with all your vendors. This includes not just vendors who deal with cybersecurity or customer information, it also includes vendors who provide security, cleaning services, or any type of access to your facility and systems.
Partner with Us for Your Cash & ATM Managed Services
In a nutshell, the benefits of a multi-vendor strategy are that it allows banks to reduce costs by outsourcing functions to vendors, while also utilizing each vendor’s expertise with different aspects of banking operations.
By outsourcing your ATM/ITM and cash in transit services with us, you’ll gain access to our team of ATM experts and technicians who can make sure your machines are well-maintained and running at all times. As a leading ATM and Cash in Transit provider, we will help you improve your operational efficiency while promoting and preserving the trust of your customers. We service throughout the northeastern United States including New Jersey, Pennsylvanis, Meww York and Delaware.
Please contact us to learn more about our services and obtain a quote. You can also subscribe to our blog to stay on top of banking and ATM industry news.
