By Kelly Flynn, National Director, ADVANTAGE
For many credit unions, margin pressure is no longer a future concern – it’s a daily reality. Rising operating costs, increased compliance expectations, and competitive rate environments are forcing leadership teams to scrutinize every line item. Yet one area often escapes deeper examination: the true economics of vendor relationships.
And while no single vendor breaks the budget, the combined costs of vendor contracts can quietly erode margins, often unnoticed.
Vendor ecosystems tend to grow faster than the governance frameworks designed to manage them. Tools and platforms are often added to solve immediate needs, but few are revisited once implemented.
Over time, overlap increases and accountability fades. Contracts renew automatically. Pricing escalation goes unchecked. Different departments manage pieces of the ecosystem without a complete view of total spend or long-term impact.
What begins as operational convenience can quietly become a structural drag on profitability.
As 2026 unfolds, margin pressure is forcing leadership teams to look beyond revenue generation and deeper into operational efficiency.
For credit unions, vendor economics are no longer just a procurement issue – they are a strategic one. Core systems, card processing, digital banking platforms, and Visa, Mastercard, and PIN networks represent some of the largest and most complex technology contracts on the balance sheet.
Even small inefficiencies across these relationships – incremental fees, add-ons, or misaligned contract terms – can compound over time and quietly compress margins.
Leading credit unions treat vendor oversight as a core financial discipline – not merely an operational necessity. That shift includes:
Evaluating vendors based on total economic impact, not just contract price
Regularly assessing whether pricing models still align with institutional scale and strategy
Prioritizing solutions that reduce friction, consolidate functions, and improve visibility into performance metrics
It’s not just about controlling costs – it’s about relevance. Each vendor relationship should actively support the institution’s strategic direction. This approach allows leadership teams to move from reactive cost management to proactive margin protection.
Fewer surprises. Better margins. More intentional growth.
For many credit unions, the opportunity isn’t adding new technology – it’s understanding the full economics of what’s already in place.
Taking a fresh look at critical vendor contracts, particularly through an objective lens, can reveal where costs have crept in, where value has diminished, and where leadership teams can make a meaningful impact on margin without sacrificing service or growth.
The credit unions that thrive in the coming years won’t just manage expenses better – they’ll understand the economic mechanics behind them.
Connect with ADVANTAGE and take a closer look at a strategic approach to vendor contract optimization.