Hard facts on ROI on using G2Link to monitor vendors

If you’ve followed our press announcements or blog postings, by now you probably understand the benefits of smart crowd interaction to help measure and understand a company’s financial performance. As well, given this capability and the enormous pressure banks are under from a compliance perspective, G2Link becomes a very real and tangible game changing technology.

Related whitepaper: Vendor Monitoring ROI

What about costs? What about the accelerating costs of compliance? What might your costs be if you don’t take advantage of G2Link’s trust and reputation platform? Some good questions.

To get the answers we performed in-depth interviews with several banks in the Mid-Atlantic region with assets in the $200M to $2B range. The institutions were rated based on the self-assessed quality of their program and interviews were performed to determine the hard and soft costs of maintaining vendor compliance. The tasks measured were commonly performed by vendor managers and included the following:

  • New vendor due diligence
  • Contract management
  • Service level collection and review
  • Vendor review calls
  • Data acquisition
  • Site visits
  • Report compilation

The average number of vendors managed per employee at the highly graded institutions was 33. If we estimate the fully loaded rate per hour to $45, the average cost of compliance is detailed below.

Or a cost per vendor per year of $2,498. But wait there’s more. The latest guidelines from the regulators (OCC 2013-29) place an additional monitoring burden and cost on managing risk of 3rd party relationships. Below is an estimate of these new costs of compliance:

These new requirements add an additional $2,609/vendor/year. This brings the total cost per vendor to:

Average cost of compliance —– $2,498

New requirements ————— $2,609

Total ————————– $5,107/vendor/year

Wow! Over $5,000/vendor/year, and these costs are only going to increase as mounting pressure for compliance increases.

Let’s look at how the G2Link vendor monitoring platform can have a direct impact on the average cost of compliance (we won’t include the cost of new requirements in this analysis as they are, well, relatively new, and G2Link already saves you a bundle on just the average cost of compliance).

Two key features in our platform that automate the manual labor of collecting and analyzing data:

1). The G2Link dashboard provides a summary of all vendors at a glance. When combined with our alerts capabilities the vendor managers can monitor compliance proactively.

2). With G2Link Custom Trust vendor manager can establish custom criteria for each class of vendors. This feature requires the vendors to PUSH the data to vendor managers instead of them seeking it – virtually eliminating contract management and vendor review costs. See the chart below on how G2Link can help control vendor management costs.

Join other banks that are experiencing the movement to better vendor management. For $1,500/month, or $18,000/year gain better insight and be more compliant with G2Link.

 

Speed of Trust

I recently re-read Stephen Covey’s “The Speed of Trust:  The One Thing that Changes Everything,” and in light of our recent thinking on Trust and Reputation, I would like to emphasize a few points. First, that while Trust is important on a personal level, it is absolutely critical for business interactions. Second, Trust is not static. It can go up or down with the ebb and tide of normal business but it can be proactively managed and maintained.

In the opening section he recounts a meeting he had where one of the attendees expressed to him privately how he had distrust for the other attendees and stated: “Either you have trust or your don’t.” Covey closes that section stating that in fact there is a LOT we can do to establish and increase trust and that by doing so, will have a huge positive impact. Trust will always affect two outcomes; speed and cost. When trust goes down, speed goes down and cost goes up. Just look at the time/cost of airport security after 9/11. The reverse is also true; when trust goes up, speed goes up and cost goes down. For example, Internet commerce was broadly criticized during its emerging days while now, almost 20 years in, it has grown and eclipsed many of the brick and mortar retailers of the day.

A little deeper into the book, Covey recounts his experience with the merger between Franklin Quest and Covey Leadership Center to form FranklinCovey. He goes on to define Trust as confidence vs. suspicion in interactions with others and interactions between businesses. In fact he quotes many great business leaders like Jack Welch, Alan Greenspan and Jeff Bezos to prove his point that in business Trust equals SPEED!

“Trust happens when leaders are transparent, candid and keep their word.  It’s that simple.”  -Jack Welch

He wraps up giving us a tool to enable businesses and individual to manage Trust related risk which he calls the “Smart Trust Matrix.”  Like Covey’s father’s explanation of the Priority Matrix, the Smart Trust Matrix helps individuals to operate in a space of high trust vs. distrust. It’s a great tool and critical for businesses who want to assess and manage their reputations.

I agree wholeheartedly with Covey’s assertion that you can control your Trust and that it can be impacted positively if managed proactively. In fact, in our next software release, we plan on introducing a way businesses can control, grow and disclose their trustworthiness to others. A central depository of Trust, or as we call like to call it, a Trust Exchange.

What An Amazing Headline

What an amazing headline out of Ireland:

Some credit unions ‘unwilling to comply with the law’ – Central Bank

http://www.thejournal.ie/ – Friday, May, 2nd, 2014

What impact, if any, does this have on Credit Unions here in the US?

The report states that some credit unions still view risk management as a one-off exercise, done only to fulfill regulatory requirements. Of particular worry, the report says, is the fact that many credit unions have not updated their lending practices.

“It is of considerable concern that some credit unions do not as yet appear to have realistically addressed necessary improvements to their lending practices and credit risk management systems.”

Why? Could it be that legacy systems are too burdensome, expensive and out dated? Could it be that regulation has overwhelmed many institutions? What does this mean for credit unions here in the US?

At G2Link, we don’t believe it’s unwillingness on behalf of credit unions to comply with the law, but simply a lack of tools and technology to stay up with the regulation. We understand their situation and that’s exactly why we developed our risk compliance platform. G2Link is the first social media based trust and reputation software platform for financial institutions. Most organizations, especially banks, want to adhere to all regulations. However, the regulatory burden has become overwhelming and with outdated and expensive credit measurement systems, credit unions and other banks just simply keep up.

Before G2Link, businesses had limited options to understand and measure the trust and reputation of other companies. They relied upon outdated payment history and accounting data from a credit bureau to understand a company’s ability to meet its obligations. Using social media to capture the wisdom of the smart crowd, G2Link is enabling companies to take control of risk management by providing actionable, accurate and inexpensive business performance data.

At G2Link, we’ve spent a great deal of time listening to and understanding the compliance requirements financial institutions are under today. Most recently, G2Link attended the National Association of Credit Union Service Organizations (NACUSO) annual conference last week in Lake Buena Vista, FL. With close to 500 attendees, the overwhelming theme was, “we live in fear that we don’t have enough visibility across our third party vendor relationships.” We believe that it’s hard to discern the health of a dynamic company by “checking” in on them at random time and that companies should be monitored continuously in order to truly understand their performance. G2Link provides an interface for each company that displays their performance over time and a history of key events that are generated by the company, its key relationships or regulatory bodies.

Stop running your compliance department in fear and take control of your risk management at
app.g2link.com.

G2Link Joins New York Bankers Association

Banks adopting vendor compliance platform to manage and monitor risk

G2Link (www.g2link.com), the first social trust and reputation software platform for banks is pleased to announce its membership in the New York Bankers Association.

“We are excited to be working with NYBA and its extended membership organization”, said Edward Sullivan, Founder and CEO G2Link. “The board at NYBA sees the value in our vendor compliance platform to help manage trust and reputation with their third party relationships and mitigate risk, in an ever increasing and expensive regulatory environment.”

The new and expanding regulatory environment is one of the most demanding issues facing financial operations today. Banks and credit unions are under enormous pressure to gain trust within their loan portfolios and vendor management relationships. Many of these institutions lack the business information systems and consistent processes to understand and manage risk economically. G2Link creates an inexpensive, seamless solution to research, monitor and track your most important business relationships.

Before G2Link, businesses had limited options to understand and measure the trust and reputation of other companies. They relied upon outdated payment history and accounting data from a credit bureau to understand a company’s ability to meet its obligations. Using social media to capture the wisdom of the smart crowd, G2Link is enabling companies to take control of risk management by providing actionable, accurate and inexpensive business performance data.

G2Link is one of the first companies to understand and capture the power of crowd based interactions and use this data as an indicator of vendor compliance, in real time. Increase your understanding of the business relationships that matter most – Join the movement to G2Link.