Turning Vendor Management into a Profit Center

February 16, 2022 — The historic Refi Boom has ended and mortgage lenders are having to look everywhere for ways to generate revenue and cut costs.  Some very lean times are being predicted.  For many, all options are on the table.

Surprising to some, there is opportunity within the Vendor Management unit.  

VM as Profit Center

Today, we see such a trend whereby lenders and credit unions are leveraging the many opportunities that exist within VM units, such as:

  • End-to-end evaluation of vendor pools
  • Upgrading performance, contract terms, price and overall value-add
  • Re-bidding services via Requests for Proposals (RFPs)
  • Vendor pruning to reduce historic vendor oversight and governance costs; Eyeing vendors with multi-line offerings
  • Establishing revenue generating VM profit centers

Joint Ventures (JVs) with certain types of vendors have also become increasingly popular... maybe even a 'best kept secret' to some.  Why do we say that?  When writing THIS ARTICLE, just published by our friends at the MBA NewsLink, we spoke to several lenders and vendors about their JVs, although none wanted to officially go on record discussing them.  A competitive advantage we presume.

Vendor related JVs are not a new concept, as they have been in place for decades, especially on the front-end with mortgage referral partners.  However, there is renewed interest, and action, in JVs.  In fact, some financial institutions even outright purchase vendors, owning the entire entity.  Earlier this month, Truist Insurance Holdings, Inc., a subsidiary of Truist Financial Corporation, announced that it signed a definitive agreement to acquire Kensington Vanguard National Land Services, one of the country's largest independent full-service national title insurance agencies.  (Don't share the milk.  Buy the cow!)

Having led a Vendor Management unit for nearly a decade at a Top-5 lender, and also having served on JV Boards, we completely understand the model, and are huge fansprovided you go in 'eyes wide open' and have realistic objectives.

See the MBA NewsLink article for some added detail, considerations and advice. 

Thanks for reading.

Scott@VendorSurf.com

Co-Founder

 

Our Professional Services