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.