Banking Relations

Laura Ross from the US Department of the Treasury, Office of Technical Assistance, discussed the development of Requests for Proposals for banking services. She warned that RFPs should only be issued when it is needed. There are proper times to create RFPs. You do not need an RFP to ask banks for new proposals on new services.

Step 1 – Document the current environment

The purpose of this step is to understand the current environment for banking services, the key business and technical requirements and identify potential service gaps and improvement opportunities, according to Ms. Ross. This step includes:

• Banking Needs Assessment
• Prepare a customized packet for each area of your treasury organization regarding their current banking services
• Request current bank account analyses for all banks and accounts
• Design a checklist determining necessary information to gather from each function

Step 2 – Develop the RFP

Developing the RFP takes the longest time according to Ms. Ross. Ms. Ross has been on both sides of the banking RFP process. She warns that many RFPs are too large, often include the same question asked five times. The RFP provides a conceptual design of the future banking structure. This step requires:

• Develop an overall vision for banking structure and services required
• Analyze current bank account structures and providers
• Inventory and assess specific concerns and issues for bank service requirements
• Determine list of banks to be included in RFP process
• Develop the customized RFP for those selected banks and issue RFP

Step 3 - RFP Evaluation

Ms. Ross said that the third step focuses on evaluating and prioritizing the bank responses to determine which banks can realistically be considered to move from the current to the target environment. The purpose is to objectively prioritize banks based on their capabilities and responses and to recommended banks identified to participate in bank presentations and visits. She recommends a pre-bid conference. All questions received should be officially answered in writing and provided to all bidders. The evaluation process includes:

• Customize RFP evaluation tool for bank services
• Conduct quantitative analysis of RFP responses
• Score bank RFP results on a weighted basis
• Perform additional technical and qualitative analysis on bank RFPs
• Complete cost analysis on proposed pricing using the estimated volumes
• Determine the short list of banks to participate in the presentation phase

Ms. Ross recommends developing a check list, best on a single page, that ranks the responses. There should be a ranking method. Cost analysis is the most important aspect. She warned that many government RFPs do not provide accurate numbers to enable proper pricing.

Step 4 - Finalist Presentations and On-Site Tours

The fourth step is the research and validation to ensure that the bank can meet the current and future requirements, as stated in their response, at a level of satisfaction to your needs. This step validates the response with the real requirements. Ms. Ross provided explained the process:

• Notify the banks that did not make the final cut
• Contact the short list of banks that made the final cut to let them know of next steps and give them advance notice
• Develop the desired presentation format/script, and provide this to the banks
• Schedule the presentations and bank visits
• Evaluate the demonstrations formally and debrief after each meeting
• Conduct on-site tours of finalist banks as necessary

Ms. Ross suggests getting a list of bank references. She recommends starting at the bottom of the list because the bank will not have time to brief all references.

Step 5 - Bank Selection and Plan Development

The fifth step is the selection of the bank and development of an overall plan which will consider the key tasks, the staffing / skill requirements, timeframes and estimated costs required as next steps to move towards the targeted environment. The process includes selecting the preferred bank(s). Ms. Ross stressd that the implementation plan is the critical step. The result is a documented implementation plan for the conceptual design of the preferred banking structure. She recommends a signed contract.