It’s a fact. Corporate treasuries are under enormous pressure to more effectively manage liquidity and credit, reduce borrowing costs, shorten the cash conversion cycle and manage financial risk — all while dealing with increasingly volatile financial markets, globalization and a frenzy of regulatory changes.

In this crucible, increased importance is placed on managing banking relationships; at the same time, the ability to quickly change providers has become vital. The first trend requires more “touches,” better visibility and improved data. The second demands increased standardization and automation of routine processes. Getting the best terms and services seems to require effort in both areas at the same time.

Raising the bar

Bank relationship management begins with bank selection, which forms the foundation of all follow-on management activities. Most companies require certain characteristics and capabilities from their banking partners.

Transaction support

First and foremost, the selection analysis has to identify banks that can provide the package of services the company requires. It is not sufficient that a bank lists the required service in marketing information. The analysis must identify banks capable of providing a robust cross-section of the required services, which pass muster when analyzed in detail:

  • Can the bank provide complementary services that address fundamental requirements? For example, if you are seeking a bank for trade services, can the bank support your short-term borrowing and investing needs, while also providing the commercial paper issuance services you require? You need to define these “packages” of requirements, not the banks.
  • For global and multinational companies, geography is critical. Can the bank support your current business, as well as the geographic expansion you envision over the next five years, considering organic growth, M&A activity and the like? Is the bank’s footprint consistent with your collections and payments requirements?

Consider also the manner in which potential providers address geographical coverage. Is it native within the bank, or accomplished through other relationships? If native, does the bank truly operate as one entity, or do regional differences make it more like working with multiple banks?

Technology is equally critical. While many companies consider bank technology to be a secondary characteristic, our experience integrating treasury business processes compels us to list this as a “ticket to the dance.”

Operational efficiency increasingly depends on technology. Even a bank that features leading technology internally may have inflexible solutions that can’t integrate with customer environments. Bank technology plays a critical role in transaction processing and information reporting within the corporate customer’s ERP environment. Additionally, technology impacts service quality — we have all experienced the frustration of disjointed, disparate reporting. From a technology perspective, consider:

  • Is the necessary technology available to your organization?
  • Are the tools, information products, protocols and formats that you require available?
  • Does the provider have a track record of investing in technology and keeping offerings current?
  • Is the bank’s technology positioning consistent with yours? Does it operate on the leading edge, or is it more a second-wave implementer?
  • Is the bank appropriately active in standards bodies, industry groups, etc.? Does it rapidly embed new standards in product offerings? Is support for products based on older standards continued for an appropriate length of time?

Financial stability

Once a potential provider has demonstrated its ability to meet your basic service requirements in the necessary geographical area with appropriate technology, apply your standards for financial and market stability. Nearly all companies consider banks’ core financials and credit rating, but top-tier companies also look at things like reputation, industry presence and demonstrated track record. Consider only those banks that meet your requirements now and are likely to meet them well into the future.

Credit status

Credit considerations are foremost in the minds of most net borrowers. Though banks are not permitted to “bundle” services with credit offerings, we see in survey after survey that participation in the credit group is a significant consideration in companies’ selection and retention of banking partners.

However, treasuries should not accept subpar service delivery in critical areas, nor should they patch together processes using subpar technologies, to guarantee a certain portfolio of business to credit banks. Credit providers have a right to fair profit on a reasonable service footprint, but each should be constrained to areas in which it offers fair pricing, effective service delivery, quality customer service and some degree of thought leadership.


The tight credit market during the financial crisis materially reduced companies’ ability to negotiate pricing and terms on treasury management services. However, according to Phoenix-Hecht’s 2014 Treasury Management Monitor, companies now have some ability to pressure banks for more favorable terms and pricing. While pricing should not be the only factor considered in allocating business, it is clearly important.

Service delivery, quality, accuracy and responsiveness

A factor that is often overlooked but is critically important to operational efficiency is the accuracy of provider information around treasury management services. This obviously includes bank statements, account analysis statements and other information-reporting products, but it also applies to more esoteric data such as automated clearing percentages in the customer’s ERP system, and the ability to automatically process and apply lockbox details.

Quality includes a number of factors, such as overall competency, knowledge and professionalism, and the provider’s efforts to maintain the relationship. Although quality can be difficult to assess prospectively, it should be measurable retrospectively. Consider reference checks, product team discussions and performance in other areas, as appropriate.

A related consideration is the bank’s responsiveness when issues are reported. This involves issue resolution and Service Level Agreement (SLA) commitments, as well as next-level behavior like the overall number of errors noted and the frequency with which errors recur.

Thought leadership

Is your service provider bringing ideas to you or just pushing products at you? The best providers understand the market, their own offerings and your business, and suggest improvements that are worthy of consideration. For example, has your bank approached you about electronic bank account management (eBAM)? In a good relationship with a great provider, synergy and a win-win mentality should occupy more of the agenda than outstanding issues and resolution status.


One final key consideration was highlighted by a Treasury Strategies survey commissioned by WAUSAU Financial Systems and featured in a December 2013 Treasury & Risk article: corporates’ general dissatisfaction with providers’ ability to efficiently on-board and off-board services, businesses, accounts, etc. The quality of implementation services is a critically important topic for discussion with potential providers. Obtaining assurances (and documenting them, if necessary) is easier prior to project start than once the implementation is underway.

Mining value in banking relationships

In today’s challenging and fluctuating business environment, with constant pressure on staffing, treasury needs to better manage bank relationships with less. This is almost impossible in poorly controlled, spreadsheet-based processes. In fact, in a world where direct, fully automated, ISO-standard, bank-neutral electronic messaging is possible between corporate systems and banks, it is no longer acceptable for bank administration to be managed via a maze of spreadsheets.

Mining the value buried in banking relationships, and gaining the best terms and service from providers, demands better solutions. Our customers invariably discover significant savings when they begin to more thoroughly analyze bank fees and establish a routine, detailed analysis of key banks/accounts.

If you find yourself frustrated by inefficient, manual bank account management, it is time to consider technology that could improve your banking relationships.


Read the September Special Report on Bank Relationships & Borrowing.

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