Recent and Upcoming Speaking Engagements
- 26: GSB: IT Management School, University of Wisconsin
- 25: Advanced Banking School: Penn State University
Trent Fleming
Summer 2011 Banking Newsletter
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Automatic Renewal Clause – many contracts contain a provision whereby if notice is not given in advance (typically 180-365 days) the contract will automatically renew for some specified term. Even if you intend to renew with your current provider, notification under this clause will give you the flexibility to make a good decision on your time frame.
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Early termination fees – especially since we are entering a period where we might begin to see more M&A activity, these fees should be identified and addressed, as they may be material to the purchase price of an institution. Typically, vendor contracts provide for substantial penalties, as much as 80% of the average monthly fees for the remaining term, etc. – you won’t be able to change how the contract reads today, but you’ll want to negotiate for better terms going forward with any vendor.
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De-conversion fees. Should you choose, at the natural end of a contract, to move to another vendor, you’ll find that your current contract may be somewhat open ended (as in “blank check”) as to what your current vendor may charge you for deconversion assistance. Again, little can be done in your current contract, but you’ll want to negotiate for a reasonable, fixed fee in any new contract.
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Core system contract and vendor negotiations
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GLBA Risk Assessment for Operations and Technology
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Teller Capture Vendor Assessment and Implementation Planning
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Branding and Advertising Initiatives, including Internet/Social Media Strategies and specific product and service promotion
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Remote Deposit Capture Implementation and Marketing Services
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16: Graduate School of Banking, University of Wisconsin-Madison “Reinventing Your Bank’s Marketing Focus”
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27: South Dakota Bankers Association Technology Conference, Sioux Falls
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28: Wisconsin Bankers Association Technology Conference, The Dells
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7: Washington Bankers Association Technology Conference, Seattle
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Graduate School of Banking, University of Wisconsin-Madison, First Annual Technology
Trent’s Comments is published six times each year and provides insight into strategic topics facing financial institution executives. Please feel free to share this with your staff and colleagues.
Trent Fleming
Debit Interchange – A Call for Common Sense
Now that we have a ruling on debit interchange, I wanted to remind you that debit cards, used in place of checks, remain a significant advantage to the bank, apart from any interchange fees you receive. The transaction itself (especially if we look at average dollar transactions) is less expensive to process, and the long term impact of storage and retrieval (essentially an 80 to 100 byte record vs 25 to 50 thousand bytes for checks) is greatly reduced. While your interchange fees will drop, as a result of the cap on interchange, imposing fees for debit card use constitutes an economic barrier to acceptance that sends the wrong message to your customers who have already embraced debit cards. Due in part to costs, you may need to reduce or eliminate rewards programs associated with debit cards, but these are not the only driver of customer use of debit . . . convenience and purchase protection are equally important. In terms of incentives, take time to re-evaluate simple utilization incentives, perhaps partnering with merchants, that will serve to build more volume for your debit card program.
Long term, electronic transactions are the way to go, and you want to continue to foster that mentality. Let’s not overreact and destroy the benefits we’ve built with debit cards.