Contract cost reduction

What is the SVEJDA Contract Cost Reduction Service?

  • ATM/Debit Card Processing
  • Check Vendor Contracts
  • Core Data Processing Contracts (for service bureau contract services only)
  • Item Processing Contracts
  • Internet Banking Contracts
  • Bill Payment Contracts

As a result of our many studies of bank operations and from our experience in vendor contract negotiations, we have developed a number of target cost standards for negotiating "A" deals for the specific contract areas listed above. We have also found that these areas are often sources of significant hidden cost reduction opportunity.

We review the contracts that the bank currently has in place for the areas listed above for opportunities to negotiate reduced costs without reducing quality of services or products. Based on our experience with negotiating these contracts for other financial institutions, we prepare an appraisal of the cost of these services. This appraisal compares your bank's costs with our target cost standards that we have developed for getting an "A" deal. Then, based on the results of our appraisal, we negotiate renewals of contracts on behalf of the bank, subject to bank management oversight and approval, with an objective of cost reduction.

For our new bank clients, we include this contract cost reduction service as part of our Quick Start Profit Enhancement Program. However, for older clients and financial institutions that would like to focus only on this area of potential profit enhancement, we have designed this service as a standalone service.


We currently include within the scope of our Contract Cost Reduction Service only the following bank expense areas:

  • ATM/Debit Card Processing
  • Check Vendor Contracts
  • Core Data Processing (only for data processing contracts with third party service bureaus). In-house data processing is excluded.
  • Item Processing Services performed by third party vendors Internet Banking and Bill Payment

Currently, these are the only contracts and expense areas included for our Contract Cost Reduction Service. These are the expense areas where our experience has enabled us to develop target cost standards for getting an "A" deal.


After the bank signs the retainer letter for this service the process works as follows:

Retainer Letter

The first step to begin this service is for the bank to sign a Retainer Letter for the SVEJDA Contract Cost Reduction Service. In the Retainer Letter the bank identifies which of the five (5) contract cost reduction service areas that they want SVEJDA to review. The bank may specify as many contract areas as they wish to be included for review.

Bank to Designate Contract Cost Reduction Service Coordinator 

We request that the bank designate a project coordinator to work with Svejda and Company, Inc. regarding this service.

Request for Information

We will provide the bank with a Request for Information listing the specific contracts and invoices that we need to review. We request that the bank make a copy of these items and send copies to our office for review.

Review and Appraisal

We will review the contracts and invoices collected and prepare a written appraisal of your bank's current costs compared to our target standards for an "A" deal. After we have completed our contract review and appraisal, we will prepare and send to you a written report  summarizing our evaluation.

The report will list each of the vendor contracts and expenses that were reviewed for opportunities to reduce cost, along with an approximate schedule for when the negotiation process should be started for each contract.

We will include our appraisals of each contract expense area. Each appraisal will estimate how much cost reduction we think we will achieve through negotiation.

Bank Decision Regarding Whether to Proceed with Contract Negotiation Service

Based on our review, bank's management decides whether they want to proceed or not to proceed with SVEJDA negotiation service on any of the reviewed contracts.

There is no cost or fee to the bank for any contract reviews or appraisals that the bank decides it does not want us to proceed any further with the negotiation service.

For the contracts that the bank would like us to proceed with our negotiation service, we will need to obtain an authorization letter.

Authorization from Bank to Negotiate

For each contract or vendor expense that we think is a good prospect for negotiation (based on our appraisals), we will prepare and send to the bank an authorization letter to be placed on the bank's stationary and signed by an appropriate officer of the bank. This authorization letter allows us to speak to vendors and send proposals on behalf of the bank. We ask the bank to send us the signed authorization so that we can include them in our written proposals to vendors. 

Proposal to Vendor

Once we have received the written authorization letter from the bank to proceed with a specific contract negotiation, we prepare a proposal to go to the vendor for a new contract. Our basic approach is to tell the vendor in our proposal what the price and terms of a new contract must be in order to retain the bank's future business without having to put the business out for bid. Our proposal to the vendor is based on our appraisal of the current contract being considered. 

Negotiation Process

The Typical negotiation process starts with our written proposal to the current contract vendor for new reduced costs in exchange for a contract extension with the bank. There may be a vendor counter proposal. We work through the negotiation process until we have the "A" deal we were seeking, or the best deal we think we are going to get from the vendor without going through a bid process. We will review this deal with the bank along with our recommendation either for approval or to take alternative action. In over 90% of our cases we achieve a deal that we can recommend for approval by the bank.

In all cases, the bank is the final decision-maker regarding whether to approve or reject a new contract proposal.


Many of the contracts that we review are three (3) to seven (7) year contracts. Again, based on experience, we have found the best time to negotiate contract renewals and extensions by type of contract are: