Negotiating access to your own customer data

Customer data and efficient access to analytics derived from client data is critical for a bank’s competitive advantage, yet it’s also an advantage that institutions heedlessly give away.

Consider that the typical community or regional bank tends to evaluate its core technology vendor contract renewal every five to seven years. This is an onerous process cluttered with requests for proposals (RFPs) to alternative providers, even if only as a way to test the marketplace. Some banks may also hire consulting firms to provide objective options regarding current market conditions as well as specific contractual elements that are important to the financial institution in question.

What leaves me scratching my head, though, is the core provider’s perceived ownership of a bank’s data and the institution’s associated costs with accessing that data. Why does access to transactional data and integrations to other data sources become such a massive pain point? Why are banks being nickeled and dimed when the truth is that the bank data actually belongs to the bank? For community banks that are already operating in challenging market conditions, the need to spend significant sums to access their own data is ludicrous. Moving forward, such institutions should negotiate clear contractual rules around data and data integrations.

Integrating data cannot be left as a discussion topic after the contract ink is dry; that conversation must occur at the negotiation table during the core contract renewal. If a consultant is used, hold them accountable for maintaining the bank’s ownership of the data. After all, the consultant shepherded the bank through the due diligence process and the technology’s feature functionality. Bankers: do not be silent and lose the ownership of your data.

Bankers should also beware of variable cost price structures and outrageous integration fees. You should not be charged for the number of times you access your data, nor accept different costs to connect to different systems. It is reasonable for the software provider to charge for a standard middleware solution, but make sure the licensing mechanism is fixed and supports all the different messages as well as data structures you may want to access.

Finally, bankers should make sure that the interests of the vendor and the bank are aligned. Connecting to best-of-breed systems and access to your data should be viewed as a right and your competitive advantage. Make sure that your contract with all vendors reflects a reasonable pricing structure designed to give you the freedom to serve your customers to the best of your ability.

Mr. Naude is CEO of Wilmington, N.C.-based nCino. He can be reached at [email protected]