Banking News

The RFP Enigma: How Treasurers are Cracking the Bank Ciphers

The RFP Enigma: How Treasurers are Cracking the Bank Ciphers

(19 June 2020 – Global) An RFP is time consuming, onerous and, ultimately, can deliver precious little in terms of results. New research from East & Partners Asia lifts the veil on the opaque world of the RFP.

A request for proposal (RFP) process is aimed at helping corporate treasuries make cash management purchasing decisions - but it also takes significant time and effort. The process is used to evaluate the relative merits of different banks before setting up a complex new cash management arrangement and is often triggered by a change in business strategy or by overdue reviews of existing arrangements. All too often, however, it delivers few real insights into why a business needs to change.

Even experienced teams can invest significant amounts of time framing their company’s pain points, procedures and strategic objectives to eliminate any misunderstanding or confusion while investigating the benefits of each individual bank’s proposal. Language used to explain treasury concepts and solutions can also differ across banks, adding another layer of complexity.

Research by East & Partners pulls back the curtain on the opaque world of bank RFPs, uniquely quantifying the experience large corporates have with the often ‘closed door’ nature of RFP implementation. The analysis includes relative bank performance, customer pain points, most pressing RFP needs and strategic recommendations to act upon the often overlooked ‘voice of the customer’.

Direct interviews were conducted with the Top 100 revenue ranked corporates in each of eight countries including Australia, China, Hong Kong, Singapore, Germany, the United Kingdom, Canada and the USA. 

Key Insights

  • Based on 3,186 RFP ratings globally, HSBC, Citi, Standard Chartered, JPMorgan and Bank of America are the top five most popular banks invited into RFPs globally
  • Overall RFP experience varies significantly by bank however
  • A typical RFP carries an end-to-end execution time of 31 weeks
  • Top three reasons corporates launch and RFP vary significantly by country
  • Chinese and US corporates have undertaken the most RFPs since 2010
  • Less than three quarters of all RFPs issued in the last decade were deemed ‘successful’
  • Unexpectedly given advances in digitisation, RFP submission issues rated as the most frustrating pain point with remarkably similar frequency across all global markets
  • What are Chinese banks getting right in the RFP process given their global counterparts are taking considerably less time for less value ‘on the line’?
  • Despite the intricate and protracted nature of each RFP engagement, corporates are most likely to move only in part to a new provider

Viral Concerns

The impact of coronavirus is also having an impact on the RFP process with customers now specifically demanding that banks factor this into their responses.

Treasury teams now demand that banks ‘come to the party’ and provide a closer match of solutions to their requirements (33%), requiring a greater degree of trust and transparency in dealings.

“We’re getting concerned about the coronavirus’ effects on our cross-border business operations and are working on having explicit requests for responses to this in future RFPs with our banks,” said one corporate treasurer at a US$30bn Hong Kong logistics group

“The big issue often is that we end up not being able to compare apples with apples across the banks who are responding. Half the time it seems as though they’re competing against each other rather than coming up with the right solution for us, the customer,” said one treasurer at US$15bn Australian resources corporate.

By Peter Shadbolt, CT

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