What does an obscure Belgian mathematician, a bunch of dead Frenchmen, and your credit union have in common? More than you’d think.

In the early 1800s, a mathematician named Adolphe Quetelet became obsessed with what he called the “average man.” His theory was simple: when you look at enough people together, they become a system. And systems are predictable.

Quetelet studied crime rates across France and concluded that next year’s murder rate would look remarkably similar to this year’s. Not because people are predictable, but because systems are. 

Credit unions are predictable systems

What Quetelet’s math has proven for hundreds of years is that your system will continue to operate at the exact same level unless you make fundamental changes to underlying conditions. 

How your credit union operates today – any inefficiencies or underperformance or misspending – that will continue on and on and on . . . unless you change the conditions.

And so, voilà! Over a series of articles, I’m going to look at a few of the conditions that you can address, that are costing your credit union (and your members!) millions of dollars. 

Today, we’re starting with contract inertia.

What is contract inertia?

Believe it or not, the average financial institution has somewhere between 400 and 600 vendor contracts. Yes, even yours. 

It’s no surprise then that you probably haven’t reviewed most (or any) of those vendor contracts recently to ensure the services are still needed, the cost is worth it, and/or the vendor is delivering what they’re supposed to.

Seriously, think about the last time you or your team sat down and looked at a contract, what you’re paying for, and what you’re getting in return. Or think about the last time you sat down with a vendor to discuss an upcoming contract renewal, negotiate on price and services, and make sure your credit union gets the better end of the stick.

Keep thinking. I’ll wait. 

See, this is exactly what a lot of those vendors are counting on – an under-the-radar auto-renewal process and credit union leaders being too busy to think about what they’re paying for.

Half of vendor services that you pay for go unused

More than two-thirds of SaaS (software as a service) programs have auto-renewal windows between 30 and 60 days for a multi-year agreement. These are the 30 to 60 days where you’re just wrapping up your 5300, just before the examiners come in for a week, after which you have your annual meeting and then you go on vacation . . . Nobody knows how they do it, but it’s always that 30 to 60-day window. Unsurprising then that one out of every two SaaS programs goes unused. As in half. 50 percent.

One credit union we work with (<$100 million in assets; ~6,000 members) had a multi-year contract with an SMS service that I would wager a majority of people reading this article are paying for.

This credit union had already gone through a five-year cycle with this company. Five years of $5,000 a month, and they’d never switched it on. Never collected a cell phone number. And honestly, they didn’t have the tech or capacity to do anything about it either, but they’d signed the contract and just allowed it to tick along for years, and then allowed it to auto-renew. All to the tune of $300,000. 

(Sidenote: this was before we got involved. I’m not letting any credit union throw away over a quarter of a million dollars on unused SMS technology!)

Sneaky auto-renewals and fine-print surprises

Or let’s talk about the credit union that overlooked their core contract renewal. After they passed their rollover period, they found themselves tied to a new $600,000 a year contract. No new products, no additional services.

Oh, and it gets better. Six months later, this particular core provider sent a letter saying “By the way, on that contract that you just allowed to renew, there was this clause where you didn’t opt out of it in time, so you actually owe us another $110,000. Whoopsies!”

You and I both know there are cores out there that don’t cost $600,000 per year; there are also cores that don’t hit you with six-figure whoopsies, but contract inertia allowed that credit union, like so many others, to throw hundreds of thousands of dollars down the drain.

This particular credit union is under new leadership and as yet, the new CEO’s Jonny-On-The-Spot with contracts and vendors, but it will take a long time for them to undo the mess they inherited.

The ripple effects of a vendor that under-delivers

Or, hey, what about the credit union that had contract inertia with their web provider? The shop that quite rightly thought that the work this provider had done was substandard: they’d developed a poorly designed website that was delivering a bad user experience and wasn’t driving traffic. But guess what, that provider’s contract was auto-renewing all the same. Leadership actively chose to ignore the issues rather than address them.

The website was already built, so this was just a hosting agreement that cost a few hundred bucks a month, and this web provider actually let clients buy their way out of multi-year contracts for 18 months of fees. So for around $2,200, the credit union could buy themselves out.

But here’s the thing: after buying themselves out, we built the credit union a new website, one that was fit for purpose. And over the next 12 months, they generated $400,000 of attributable loans through their digital channels.

That’s $400,000 in loans that the credit union could have been originating much sooner had leadership had the uncomfortable conversation with the vendor that wasn’t performing. 

How to eliminate contract inertia

Here’s your homework: Look at your contractor register (and if you don’t have one, that’s action number one. Create a contract register!)

Look at the renewal dates and find the ones that are 30, 60, 90 days away – those are your unpinned grenades. Review those contracts and renewals, and ask the hard questions, have the hard conversations. Don’t pay for services you aren’t using. Don’t use vendors who aren’t delivering. Don’t let a vendor get away with nickel-and-diming you.

Because, as our Belgian friend Quetelet proved so many years ago, complex systems like your credit union will always perform how they’re built to perform unless you change fundamental, underlying conditions. And when it comes to contract inertia, I promise you will keep throwing your members’ money away until you resolve to do something about it.

This article has been adapted from a presentation Sam Plester gave at America’s Credit Unions’ Small Credit Union Conference, New Orleans, May 2026. To discuss a speaking opportunity or book Sam for your next session, please contact us.