A recent attempt to implement a new consumer digital banking upgrade at Lake Ridge Bank left executives frustrated with a perceived lack of support from an undisclosed vendor. While the system was innovative, it didn’t live up to initial expectations, says Julie Redfern, chief banking officer at the $3.2 billion subsidiary of Lake Ridge Bancorp, headquartered in Monona, Wisconsin. “We were not bleeding edge but very early on adopting a new product, and they just didn’t have it fully baked yet,” she says. That forced the bank to work backwards with the vendor to ensure the system featured the basic functionality it needed to go live.
Betty Nonn, Lake Ridge Bank’s senior vice president of technology, says this type of thing is happening more and more often. “Things are changing so fast that [vendors] don’t even know what is and what isn’t in this version of the product that they’re trying to deliver to us,” she says. “And items that we find to be very important to a client experience, they haven’t even thought through or included in this version of a solution.” Lake Ridge Bank eventually saw positive results from its adoption of the new digital banking system, but Nonn says she continues to push the vendor for additional improvements to the platform.
Their experience is not unique. Forty-one percent of the bank CEOs, technology executives and board members who responded to Bank Director’s 2025 Technology Survey said their institution had a new technology initiative that fell short of its objectives in the past 18 months. Of those, 56% cited poor vendor support as the reason. Others reported longer than expected implementation times (41%), integration challenges with existing systems (22%) and insufficient due diligence (19%).
Strengthening Third-Party Risk Management
Both sides are often responsible when a technology initiative doesn’t live up to expectations. “From the vendor side, there’s sometimes over-promising and under-delivering,” says Rafael DeLeon, senior vice president of industry engagement for Ncontracts, a vendor risk management firm that works with financial institutions and fintechs.
But that can be due to the pressure many startup firms face to turn a quick profit, says Stu Bradley, senior vice president of risk, fraud and compliance solutions at the data and AI software company SAS. “You’ve got venture capital and private equity that has gone in, and they’re really, really, really expecting a return because their end game is a three-to-five year trajectory where they’re going to sell an asset and monetize that asset,” he says. “And so that’s a very risky proposition to be in.”
DeLeon, who also worked as an examiner with the Office of the Comptroller of the Currency for 32 years, says banks are often to blame for having unrealistic timelines or inadequate internal resources. He says institutions could focus more on improving their third-party risk management processes. “They have not prioritized it as they should,” he says. “It’s often a resource allocation and sophistication issue.”
Nonn has worked at Lake Ridge for 39 years, so she has a lot of institutional knowledge about its past and current operational systems. But she says most employees don’t have that experience, which can be challenging from a due diligence standpoint. “When you’re dealing with a contract, you sometimes have to know that, ‘Well, this needs to interface with either this other vendor or this other internal system to work properly,’” she says. ”And sometimes, there are surprise costs … all of a sudden, [you say] ‘Oh shoot, now I’ve got to spend another $40,000. We didn’t plan for that.’”
It’s why Michael Carpenter, vice president of risk management at Ncontracts, says it is crucial that financial institutions take the time to work with various teams and connect the dots when going through the due diligence process. “You need to be making sure, not assuming, that the vendor has strong governance over change management, identification of change, taking the appropriate actions and communicating to those clients,” says Carpenter, who adds that such due diligence gives an institution the ability to create a contract that can help guide the implementation process.
Having learned the hard way through Lake Ridge Bank’s recent digital banking upgrade, Redfern says her team is now asking tougher questions of vendors on the front end. “What’s their cyber stance? What about AI and PII [personally identifiable information]?” she says. “We have some things that we’re automatically looking for and maybe asking for more robust [contract] language to protect ourselves.”
But Bradley believes the work must start even before that due diligence phase. “It goes back to truly understanding the objectives, the success criteria, the metrics that need to be established in a program to achieve those criteria, making sure that you’re aligned up and down the organization to those metrics,” he says. “And then, when you’re looking at a vendor, using those data points to truly understand, ‘Is this the right vendor that we need to be working with?’” In Bank Director’s 2025 Technology Survey, 56% said their bank set clear objectives for technology initiatives and investments; just 18% measured a return on investment.
Ongoing performance monitoring is also key, according to Carpenter. He says too many financial institutions aren’t paying enough attention to what is actually being delivered by their vendors in real time. “Large overhead is spent on these vendors,” he points out. “Are we getting what we paid for? Are we monitoring in a way to understand that yes, we are getting the return on investment?”
Stopping the Hype
While using a trusted partner is one way to ensure smoother implementation of a new technology initiative, more banks are looking at solutions from newer providers to meet their goals. “We’re now bolting onto small fintechs as third parties, and they don’t maybe have the same reputation that your core banking solution has. So, you really have to be careful who you are attaching to,” says Redfern, who adds that there is also an increasing regulatory focus on risk management. “With the amount of breaches and fraud and this, that and the other, it’s really risen out of a necessity to be really careful about who you’re partnering with.”
Bradley says one way vendors can help alleviate risk concerns and ensure financial institutions get what they truly need is by stopping the constant hype cycle around new technologies. “I think too many times these technology modernizations or deployments of new technology are about the technology, and they’re not about the people and the operational processes,” he says.
As artificial intelligence and other new technologies continue to flourish, vendors are offering more new solutions than ever before, leading Nonn to consider help from outside consultants. Many other tech executives are doing the same, she says. “I think they’re recognizing that they can be so complex that having an independent consultant might make sense, might save them money in the long run.”
DeLeon says investment in such expertise — both internal and external — will be crucial to ensuring more seamless implementation in the future.
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