“Organizations expect their banks to support their credit needs; 37% of organizations increased the number of banking relationships in the past month in order to access credit. Increased credit requirements by organizations also contributed to companies issuing RFPs to select a new bank”, according to the Association for Financial Professionals® (AFP) 2024 Bank Relationship Management Survey Report.

When seeking banking products and services, organizations issue Request for Proposals (RFPs) to banks, allowing them to effectively evaluate costs, services, technology, and systems across different banking services providers.

Insights from the AFP survey underscore the significance of corporate-bank relationships and suggest actionable steps for both parties to improve their ties. Conducted in May 2024, the survey gathered 616 responses—393 from corporate practitioners (who manage or execute the treasury/finance function) and 223 from bankers. Here are the key takeaways:

Key reasons organizations initiate RFPs for a primary relationship bank

Practitioners highlighted various reasons why their organizations issued an RFP for a primary relationship bank in the last three years. The leading three reasons were:

• Dissatisfaction with the bank's customer service (30% of respondents)
• Changes in credit needs (29%)
• A need for global or regional banking services (27%)

Source: 2024 AFP® Bank Relationship Management Survey Report

Organizations place significant importance on customer responsiveness from their banks, viewing it as a highly valuable aspect. Consequently, if a banking partner fails to deliver timely customer service, corporate practitioners will likely seek an alternative primary banking partner.

Furthermore, if there is a change in credit needs, organizations will actively seek banks that can adequately meet those requirements. Additionally, when firms expand their operations into regions where their current primary banks lack a presence, they will turn to banks that operate in those regions.

Banks are rapidly adopting technologies such as artificial intelligence (AI), data analytics, and cloud computing to elevate customer experiences, improve their operational efficiencies and enhance the retention of corporate clients. However, not all banking relationships last forever.

Among the top five reasons corporate practitioners initiate an RFP for a primary relationship bank are when the bank’s technology falls short of the corporate client’s standards and when the necessity for coverage in business continuity planning is unmet.

The AFP survey report goes on to explain that “Often, smaller institutions do not have the same access to solutions or to the providers that larger banks have. Additionally, smaller institutions do not invest in technology to the same extent as their larger counterparts do. When organizations outgrow their banks’ pace of technology capabilities, it drives them to cut ties with their current banking partners.”

Organizations' RFP issuance frequency for primary relationship banks

More than two-thirds of organizations issue RFPs on an as-needed basis, indicating that relatively few organizations periodically change their primary relationship banks.

Source: 2024 AFP® Bank Relationship Management Survey Report

This demonstrates that as long as a company’s primary relationship bank fulfills its financial requirements and offers competitive services, corporate practitioners do not anticipate any major changes in the duration of their partnership with the bank.

The process of conducting a successful RFP for banking services can span several months, depending on the level of complexity. Typically, corporate treasuries carry out these RFPs every four to seven years.

Engaging with banks prior to the start of the formal RFP process offers a crucial benefit. It enables banks to gain a deeper understanding of their client’s needs and priorities, allowing them to craft more thoughtful responses. For this reason, it’s advisable to have a pre-bid conversation with each bank, regardless of whether they’re an existing banking partner or a potential one, knowing that some may not be interested in your business. “Ultimately, the banks should get ample warning that the RFP is coming their way”, recommends the AFP Treasury in Practice Guide: How to Conduct a Successful RFP for Banking Services.

In this regard, the AFP practice guide suggests that when the decision to proceed with an RFP is reached, companies should already have a clear sense of the questions they plan to ask. “The most critical first step is to set clear objectives and craft the questions around them”, observes the AFP practice guide. Moreover, it’s essential for corporate practitioners to decide ahead of time how to score each query so that they can compare the responses and align them with their primary objectives.

In conclusion, RFPs, whether digital or offline, are inherently complex and time-consuming, presenting significant challenges for corporate treasury teams that often operate with limited staffing. Thorough preparation, asking targeted questions, streamlining the RFP distribution process, and effectively collecting and analysing responses will help navigate the challenges of conducting an RFP.

Equally important is the necessity of effective internal communication throughout the RFP process. For optimal results, it is crucial to engage all relevant stakeholders from the very beginning and throughout the evaluation stage. As highlighted in the AFP practice guide, “This list may include IT, AR, AP, and accounting. It should also include everyone who will be using the services.” By fostering open lines of communication among all parties involved, organizations can enhance their ability to select primary relationship banks, ultimately driving greater value and success for their treasury operations.