The wave of digital technologies has completely changed the banking and financial services sector. Be it mobile banking or digital payments, or back-end processes and systems, technology advancements are helping banks address the dynamic market conditions, rapidly evolving customer demands, and battle increasing competition by enabling competitive differentiation.
Making these technology investments for banks also involves creating the right contracts and agreements with the vendors and service providers. Given that banks and financial services institutions would want to get the most out of these investments, creating airtight contracts becomes imperative – especially as evolving competition and increasing regulations and governance norms become a mainstay. Oversights in contracts can lead to a competitive disadvantage, escalating costs and even expose organizations to serious regulatory risk.
Banks and financial services organizations have their legal army to make sure that these contracts are thorough and airtight and take care of all the jurisdictional aspects, licensing terms, etc.
However, creating these contracts is complicated. To create such contracts, organizations need to
Getting these units to work in a cohesive harmony can be challenging and can impact the quality of the contracts.
For banks and financial services organizations, looking at a partner with exhaustive experience of reviewing licensing or processing contracts from business, engagement model and intricacies of maintenance/support SLA’s perspective becomes a major win.
Here is how this can help –
Create exhaustive contracts:
Licensing and processing contracts are not simple documents and just like any legal document, have their own set of nuances and vocabulary. This language can become confusing to those reviewing it and can cause them to miss any loophole.A partner with a complete understanding of the technology needs of banks and the workings of the domain and the business can do a more thorough review of the contracts.
With the right information and knowledge, the partner can guide the organizations to evaluate the quality of the contract and help them include terms and conditions with greater clarity. These partners can help organizations lay down terms of the contract and the expected desired outcomes and create the right service level agreements.
With their deep business knowledge coupled with technical and domain knowledge, contract review partners can help organizations create more exhaustive and relevant contracts.
The technical and domain knowledge of the contract review partner can come of immense help to create well-defined licensing and processing contracts. This knowledge can be put to use to ascertain that the scope and quality of services are well endorsed and defined. It also ensures that the product and service meet the industry standards and important elements like support and maintenance are well fleshed out in the contract.
A contract review partner who understands how the technology landscape evolves and how technology is implemented in the domain can make sure that the contract includes all relevant clauses to build a sustainable model. An understanding of how legalities meet technologies and how technology is used in processes and systems helps in discovering the right loopholes to create robust, airtight contracts and ensure that technology investments are guarded.
Defining vendor accountability becomes essential when it comes to technology licensing and provisioning contracts. Vendor accountability should define the timeframes and the budgets and lay the ownership of ensuring the adherence of the same on the vendor.
It should also define the penalties in case of delays or inaction on the part of the vendor and make sure that all the necessary technology considerations about the business are covered.A contract review partner with experience of working with multiple banks can help in outlining these clauses.
Getting contracts independently reviewed also helps as the objective then is to break the contract and find all possible loopholes and surprises that lay hidden in it. It becomes hard to identify loopholes and big grey areas in contacts when they lie hidden in loosely worded provisions.
Technology implementations are complex and business-critical at the same time. Knowing how the technology impacts the business and how it should support the business becomes essential to create clear, composite, and comprehensive contracts. Independent reviews can make it simpler to identify clauses that should be excluded and get suggestions on clauses that should be added.
When looking at investing in Robotic Process Automation, for instance, contracts have to cover not only the immediate offer but also define the support, maintenance, and the additional technology dependencies such as data storage needs, processing demands, etc. It has to flesh out timeframes and budgets and also ensure that the entire scope of the technology project is well-defined and that the services provided are exhaustive and enough. Domain and business knowledge play an important role here to ensure correct applications of technology solutions and implementations. This knowledge also helps organizations manage complex regulatory and governance rules and ensure adherence to the same.
Independent partners with the right experience can look at the existing contract to determine their efficacy and suggest appropriate enhancements of clauses and/or devise alternate clauses to remove ambiguity and provide greater clarity.
Creating robust contracts also demands listing out all the documentation that the vendor should provide on time during the project. Along with this, it becomes essential to highlight the negative impact of stated intellectual property rights, warranties, exclusions, indemnification, contractual liabilities, third party liabilities, termination clauses. Independent reviewers with the right expertise can suggest corrective measures and add clauses where necessary to safeguard the interests of the client.
Advanced technologies such as AI, Blockchain, RPA, Cloud, Big Data Analytics, mobile technologies, and the like are driving transformation in the banking sector. By implementing these technology solutions, banks can meet customer expectations, provide elevated experiences, and make their operations more efficient and productive.
However, the quality of the contract plays a pivotal role in ensuring the quality of technology implementations. Taking the time to get contracts reviewed independently by partners who have the domain, and technological expertise contributes to the robustness of the contract and protects the organization and its technology investments more comprehensively.