After working with us to implement JMFA OVERDRAFT PRIVILEGE® in 2013 to great results, The Bank of Marion decided to test JMFA’s expertise in contract negotiations. What began as a request to renegotiate one contract turned into a three-contract project that resulted in seven-digit savings over 10 years, tremendously exceeding The Bank of Marion’s expectations.
ONE SUCCESS STORY LEADS TO ANOTHER
Established in 1874, The Bank of Marion is the third-oldest bank in the state. With $351 million in assets and 14 locations across Southwest Virginia (plus another branch across the state line in Johnson City, Tennessee), the bank owes its growth and stability in large part to its hometown customer care and emphasis on serving the community.
A SURPRISING DISCOVERY
In 2017, The Bank of Marion CFO Chris Snodgrass reviewed income and expenses from 2014-16 from the bank’s debit card processing invoices. He hit an unexpected wall.
“I’ve been in banking my whole career … but a lot of the line items on those 10- to 12-page invoices were foreign to me,” Snodgrass explained. “Even our operations officer, Billy [Buchanan], who has been in IT and back-room operations most of his career, had questions,” he said, when it came to certain items on the bill.
Snodgrass and Buchanan then had an IT consultant take a look at the bills. After evaluating the pass-through fees from the card brand vendor and other expenses from the card processing vendor, the consultant delivered some astonishing news: for every dollar of additional revenue the bank generated through their card program, they were only receiving $0.48.
“We were opening tons of accounts, doing all this work — and well over half of it was going to our card processor and card brand vendor!” said Snodgrass. “The deal we had was clearly not a very good deal for us.”
OLD FRIENDS REUNITE
In 2013, The Bank of Marion worked with JMFA to implement JMFA OVERDRAFT PRIVILEGE®. During that process, JMFA Regional Sales Director Michelle Fox had mentioned the JMFA Contract Optimizer service. The Bank of Marion representatives had spoken with JMFA’s Kelly Flynn in 2014 but did not proceed at the time as they had just signed a contract with a credit card processor. But after Snodgrass and Buchanan’s review of recent invoices, they started to reconsider. And having maximized their overdraft income through JMFA, they were curious about the company’s expertise in contract negotiations.
“After we talked with Kelly and [JMFA project manager] JT Cullen, we said, ‘Look, these guys are doing it all the time. They’re seeing all the major vendors every month, they’re dealing with contracts … let’s give them a try,” said Snodgrass.
JMFA GETS TO WORK
Cullen told Snodgrass that they could certainly renegotiate the debit card processor contract. But he also suggested switching from one EFT network to another, saying The Bank of Marion could make more on their interchange.
“We wouldn’t have even thought of that,” explained Snodgrass. “We were thinking small; we were thinking, OK, we’ll negotiate with our card processor and get a better deal on that. But JT had all this experience and knowledge and knew that we could work the network contract as well as ‘level up’ with our card brand vendor to move up to a preferred customer status.”
Indeed, that’s how it played out. Cullen asked Buchanan and Snodgrass to send over their 5-10-year debit card volume projections. Cullen shared these projections with the card brand vendor and asked them to provide their best offer or he might start submitting requests for proposals (RFPs) to other vendors. The card brand vendor came back offering the bank a preferred vendor status and a number of incentives, including a $90,000 signing bonus. Over the 10-year contract, the Bank of Marion will save $682,000.
On top of that, the card processing renegotiation will save them $426,100 over seven-years — a 17% savings. The bank will also save $401,100 over seven years with the new EFT network contract.
The bank plans to use these additional funds for mobile and online banking upgrades to provide better customer-facing technology for its account holders.
“Tapping into the knowledge of the JMFA team took our contract negotiations to a level that we just couldn’t have taken it to,” said Snodgrass. “And even after paying JMFA for their services, we’re still saving much more in hard dollars than if we had done it ourselves.”
TIME IS EVERYTHING
In addition to the monetary savings and other incentives received, Snodgrass and Buchanan noted that the time savings achieved by using JMFA was incredible.
“JT provided detail work that would have taken us hours and hours,” said Snodgrass of the three contract negotiations. “It was an efficient use of the bank’s time.” Having an experienced and knowledgeable team working on their behalf let them focus on their larger projects and goals without having to switch gears and dig into the minutia of the contracts.
JMFA also provided an unmatched level of service. Though The Bank of Marion had used a contract negotiator in the past for its core processor negotiations, Snodgrass said they found JMFA to be more thorough and detailed.
One example of this occurred after the bank received the first vendor bills under the new contract terms. Cullen evaluated each bill against the new agreement to make sure everything lined up correctly, and he took the time to explain the intricacies of the contracts to Snodgrass and Buchanan. Cullen will also keep track of when contracts are set to expire so he can start the negotiations well ahead of time and secure the best deals for the bank. In the past, those critical dates had sometimes slipped by The Bank of Marion; but now, they’ll have time on their side.
NOTHING TO LOSE, SO MUCH TO GAIN
With this successful experience in the books, The Bank of Marion plans to contact Flynn and Cullen for another upcoming contract negotiation and recommends JMFA without hesitation.
He notes that any bank or credit union considering JMFA for contract negotiations should give them a try. With contingency-based fees, it’s basically risk-free — if JMFA can’t find additional savings, there’s no cost involved.
JMFA is proud to be a trusted ally for The Bank of Marion in its contract optimization — and overdraft program — needs.
To learn more about getting the most out of your vendor contracts, contact Kelly Flynn or call us at 800-809-2307.