How Credit Unions Can Protect Themselves From Staggered Contracts and Trickery
In the fast-evolving landscape of credit union technology agreements, it's crucial for financial institutions to remain vigilant against staggered contracts and potential entrapment tactics employed by core providers. This under-discussed industry secret demands attention, especially considering the rapid pace of technological advancements, such as mobile banking.
The contracts themselves pave the path for such a practice. Recently, credit union core processing agreements have transformed into extensive documents filled with perplexing language, full of contradictions and confusion.
To avoid the unpleasantness of being trapped in an unwanted relationship, it is crucial to first acknowledge the existence of staggered contracts. Furthermore, it is important to understand that many credit union core processors aggressively pursue this practice.
The next step would be to follow a few simple rules to protect yourself.
Terminate the Automatic Renewal Trap
Be proactive in reviewing your credit union's agreements and eliminate any automatic renewal language. This step requires a simple notification, usually one year before the termination date. Take the time to ensure your current agreement doesn't bind you to an unwanted and extended relationship.
Document Every Interaction
Protect yourself by meticulously documenting all communications with vendors and insist on confirmation for each interaction. Some vendors may attempt to disregard notifications, claiming they never received them. Having a thorough record of your communications can be invaluable in such situations.
Avoid Long-Term Commitments
Acknowledge the swift pace of technological advancements by steering clear of long-term agreements exceeding five years. In a world where technology evolves rapidly, committing to extended contracts may hinder your credit union's ability to adapt to emerging trends.
Centralize Agreement Approvals
Prevent contractual pitfalls by establishing a clear internal review process. Do not authorize any employee to sign an agreement without thorough scrutiny, and openly discuss this practice in management meetings. This approach fosters a unified contractual policy, ensuring decisions align with the credit union's long-term goals.
Synchronize Contract Terms
Navigate the complex language of modern agreements by clarifying your position on syncing contracts with legal counsel. Given the often convoluted nature of these documents, insist on a comprehensive review of all language pertaining to the term of respective services. Aligning these terms will help avoid conflicts within multiple service agreements.
Choose a CU Vendor Partner you Can Trust
Trust your instincts. If you have reservations or doubts about a vendor, it's important to listen to your gut. Don't hesitate to involve others from your organization and openly discuss any concerns you may have. Choosing a trustworthy partner for your Credit Union Core Processor is crucial. For more guidance on this matter, check out our blog article "A Common Sense Approach to Credit Union Core Processing Reviews."
FLEX is highly regarded by credit union industry professionals as the top choice for customer satisfaction among competing vendors. This recognition is a result of our unwavering integrity and honesty.
