Pub. 10 2021 Issue 3

The CommunityBanker 12 Your institution has decided they want a new product or service – great! They want you to start looking for the perfect vendor – not so great! The vendor selection process can be time consuming and overwhelming. Not to worry, there are a few things you can do to simplify the process and find the vendor that fits perfectly with your institution. Outsourcing Policies and Procedures The first step of any outsourcing is understanding the importance of developing risk-based policies and procedures to govern your outsourcing process. As discussed in the FFIEC Guidance, “Risk Management of Outsourced Technology Services,” a comprehensive risk assessment will consider how the outsourcing arrangement will support the institution’s objectives and strategic plans and how the relationship with the vendor will be managed. Once that step is completed, utilizing policies and procedures to review and compare multiple vendor candidates will ensure a stable comparison field and a better understanding of risk between various vendors. Using the same process enterprise-wide provides a path for ensuring both services and vendors in all areas of the institution are in line with the institution’s overall business strategy and goals. Vendor Due Diligence Now you have sent out a Request for Proposal (RFP) or started conversations with several vendors related to the proposed product or service. Now what do you do next? Due diligence can serve as a verification and analysis tool, Contracts provide you with the ability to clearly identify rights and responsibilities and address significant issues. Financial institutions can feel like they must sign the vendor’s contract as- is, especially when dealing with a big company. Vendor Selection Made Easy