In our previous article, “Unlocking the Future of Finance: Insights from Industry Expert Wayne Green,” we delved into the critical aspects of vendor management and surveillance within the financial services sector. As we continue our exploration of this mission-critical frontier, we shift our focus to practical recommendations that can help you excel in vendor management.
In this article, we’ll build upon the insights shared in our previous discussion and provide actionable recommendations to enhance your vendor management and surveillance processes. Wayne Green, with his decades of experience in financial services, offers invaluable guidance to ensure your business stays ahead and maintains trustworthiness in the eyes of all stakeholders.
Have Clarity and Consensus on Objectives and Strategies:
It may seem obvious, but having an agreed and documented set of corporate objectives and strategic actions provides focus. It means understanding the end goals and the steps to get there, but also an ability to identify quickly when things aren’t achieving what you expect and acting decisively. With vendors and suppliers playing such a key role in your business and client experience their culture, services and pricing must fit with you own aims.
If your objectives are not clear, both the vendor selection and monitoring processes can become challenging, leading to potential misalignments. It is much easier to invest resource into an effective decision at the outset than it is to unwind a bad one later.
Develop a Robust Vendor Management Policy:
A comprehensive policy should cover all aspects, including vendor selection, onboarding, performance monitoring, risk management, and contractual obligations.
Be sure to have clarity on the role the vendor plays in delivering your strategic goals and value to customers, so you always have that reference point to look back on as time passes and your business needs evolve. It should also encompass contingency planning to address potential vendor-related issues – ensuring the impact on you of any shortcomings they might have are reduced.
Invest in Technology and Automation:
Utilising modern technologies can enhance the efficiency and effectiveness of vendor management and surveillance activities. Automated systems can assist in tracking vendor performance, monitoring contract compliance, identifying potential risks, and streamlining communication processes.
Remember that investment in technology doesn’t have to mean investment in purpose-built, proprietary systems. It is often more efficient to partner with or acquire the services of a specialist provider.
Regular Training and Awareness Programs:
Ensuring that employees understand the importance of effective vendor management and surveillance is crucial. Regular training can ensure that employees are aware of the latest regulatory requirements and industry best practices.
It also democratises vendor management, giving agency to a wider group of people in the business to avoid slow response or key-person risk. Often the greatest emerging risks or service impacting issues are identified at the coal face, not in board-level service review meetings.
If everyone understands the roles, responsibilities and impacts then everyone has a role to play in expecting high standards and speaking out where they fall short.
Implement Continuous Monitoring:
Implement real-time surveillance and regular audits to identify potential issues early and rectify them before they escalate. It takes far less time to avoid issues than it does to clean up after them. Don’t forget that, in addition to quantitative information, general feedback on relationships, culture and behaviours is important.
The real skill in vendor management lies not only in analysing data, but in assessing the relationship on a personal level, understanding how small cues might indicate bigger underlying issues and doing a lot of listening.
Looking back on firm and fund failures over the past 20 plus years there have been numerous examples where issues could, and should, have been foreseen. Negative press, public disagreements, high turnover of senior people, doubling down instead of addressing concerns, financial weaknesses and irregularities, key-person risks, regulatory scrutiny or censure… With the right combination of data, relationship and cultural fit these risks can be seen, investigated and alternatives sought much more easily.
Watching helplessly after a fund, platform, custodian or any other key provider falls to pieces leaving you unable to act in time will be at best disheartening and at worst business threatening. Being “on it” and ready to act quickly will put you in the driving seat and demonstrate to all your stakeholders that you are a trustworthy, credible and confident business.