As organisations grow and expand into different territories, they often find the number of bank accounts they are required to manage increases, along with the number of banks with which they have a relationship.
The expansion of the banking landscape can also be driven by inherited accounts through acquisitions, or the need for local banks’ physical cash handling services in new territories.
The resulting landscape poses several strategic and operational issues, so there are many reasons why rationalizing accounts and banking relationships should be considered by an organization. With our expertise and experience, Zanders are familiar with the challenges, can help to identify the benefits, and can assist with performing a Bank Rationalization project:
complexity & inefficiency
Alongside the operational complexity and inefficiency inherent in maintaining a high number of bank accounts, there are several other risks and challenges that a non-strategic bank account landscape poses.
Most important is a lack of cash visibility and the effect this has on the ability to effectively manage liquidity, coupled with non-performing cash balances due to idle cash floats spread across numerous accounts.
Operationally, the need to access several banking platforms, along with a considerable number of mandates to maintain, results in the increased risk of fraud. As organisations often pay a fee per bank account, the costs of maintaining large numbers of accounts should also be considered, as should the internal cost of having to manage a complex and inefficient structure.
From a bank relationship point of view, non-centralized management often results in difficulty increasing overdraft limits, an inability to improve funding and credit lines, and a lack of leverage to renegotiate banking fees. Managing global bank relationships in an ever-changing banking landscape requires a strategic approach that considers the credit relationship with multiple banks and the share of wallet that is spent for activities in the areas of cash, liquidity, financial risk, corporate finance and capital markets.
cash management rft
To resolve the risks & challenges posed by an unmanageable bank account landscape, there is a clear need to rationalize banks & bank accounts across an organisation. Along with improved cash & liquidity management, there are several other benefits this can bring:
In a bank rationalization project, banking partners are sent a request for proposal (RfP) which will allow for an objective evaluation and selection of those banking partners who can best deliver the required cash management capabilities. The RfP process can be time consuming to prepare, and it is important to structure the RfP correctly to ensure the resulting selection is correct for your organisation’s needs.
bank rationalization process
As an independent and specialized consulting firm, Zanders has expertise in cash and liquidity management transformations and payments processing solution design:
- Comprehensive review and assessment of current situation, including data gathering from subsidiaries and interviews with key stakeholders, providing the basis for a state-of-the-art cash management solution design or blueprint for the future;
- Delivery of detailed roadmap providing granularity of the various sub-projects involved and timelines for achieving the objectives.
- A proven bank selection process incorporating a 7-step approach
- Support with developing a business case to demonstrate costs, resource requirements and P&L impact;
Our approach is impartial, structured and objective, utilising a proven methodology and 6 sigma scoring system to deliver a robust and defendable analysis to support our recommendations.
Zanders added value
- A Wallet Distribution methodology, used to objectively compare different banking partners and help to evaluate your corporate-to-bank relationships;
- Track record in bank rationalization and bank connectivity projects, including the use of APIs;
- In-depth technical expertise in all areas of treasury technology, including integration with the SWIFT network, Treasury Management Systems, ERPs and Market Data providers;
- Considerable in-house experience of managing bank selection processes via RfPs, derived from past selection and implementation projects;
- Skilled consultants from both corporate and banking backgrounds;
- Strong knowledge of main Cash Management bank’s capabilities, gained through regular dialogue and collaborative partnerships;
- A proprietary pricing database, benchmarking tool and customizable RfP templates;
- A robust scoring model to ensure objective analysis of each bank’s RfP response and subsequent presentations, demonstration workshops and references;
- Ability to challenge and hold banks to account on the availability of services and implementation commitments.