Published: October 24, 2013
Once a company has decided to adopt a multi-banking approach, a number of decisions will need to be taken about the banking group and how the company should go about implementing the new structure.
When choosing a banking group, companies will focus first and foremost on the capabilities that banks can offer in a particular country or region. In contrast to a mono-banking arrangement, the object of the exercise is to choose the most suitable bank for each market, so the company will need to assess the banks’ capabilities individually while also considering how effectively the banks under consideration will complement each other to form a complete solution.
The company will also look at factors such as economies of scale which could lead to favourable pricing, as well as the ability of particular banks to comply with industry standards (e.g. XML or SWIFT) around format and connectivity. The strategic commitment of the bank to a particular country or region will need to be evaluated closely.
Once the company has selected and appointed its banking group, the next step is to implement the solution. This part of the exercise can be significantly more challenging in a multi-banking arrangement as companies may have to run a number of implementation projects simultaneously with different banks in different regions. As such, a smooth and efficient implementation process is particularly important to the overall success of the project.
The implementation process typically incorporates five key phases:
1. Scoping
Once a bank has been appointed, the first step is for the bank to understand the company’s goals and objectives. This will involve focusing on its current operations and identifying any opportunities to make these more efficient – for example by consolidating existing accounts and activities as well as the architecture behind them.
2. Planning
When the scoping exercise is complete, the next step is for the bank to build all of the relevant topics and discussions into a project plan which will incorporate all of the relevant activities together with the associated timelines. Once the plan has been developed, it will be presented back to the corporate client with a particular focus on key priorities, activities, milestones – and the final end-date for the solution. Of course planning will occur on both sides. It is interesting how often previously unspecified requirements during scoping can come out through the company sharing its overall plan for the project. It’s key for each bank to understand where it fits in to the corporate’s overall plan.
3. On-boarding
Opening accounts and putting in place the technical infrastructure is by far the most complex and demanding element of an implementation exercise. The bank should be able to take an active role in supporting the corporate, for example by assisting with the completion of relevant documentation. The bank should provide a single point of contact to work with the appropriate contacts on the corporate’s side on topics such as connectivity, messaging and file formats. It will also undertake an end-to-end testing programme to check that data is being processed correctly. The corporate can gain efficiency here by coming up with a set of test criteria and ideally high level test cases, that can be shared across the banking group. This will ensure that each bank has a common understanding of the aims of the corporate and reduces the corporate effort. In particular, the more efficient corporates will be able to clearly articulate what the criteria are for testing to be considered successful.
4. Warranty period
When the required accounts have been opened and the appropriate products and services put in place, the bank may offer a warranty period of two or three months. During this period the bank’s implementation team will work with the company to make sure that everything is functioning efficiently and effectively in the manner agreed during the initial scoping period.
Once the warranty period is complete, the bank’s implementation team will hand over to its business as usual activity teams who will manage the relationship going forward.
In some cases some additional requirements may arise, in which case the bank will undertake another scoping exercise in order to add any products and services that are needed outside of the original scope.
5. Post-implementation review
Once all the other phases are complete, the bank and corporation will undertake a review of the implementation. This might involve a questionnaire session, during which the solution is reviewed and evaluated. This is an opportunity to make sure that all of the original components of the project have been completed and to identify any lessons that can be learnt from the process. Once this meeting has been completed, the implementation project will be officially closed down.[[[PAGE]]]
The implementation phase is a crucial period. It is important to make sure that the process works as smoothly as possible at this early stage in the relationship between bank and corporate so that the solution the corporation gets is one that meets their requirements in full.
In many cases, the secret to a successful implementation is to have the right people working on the project on both sides of the relationship. Companies are increasingly looking for a single point of contact during the implementation process. Rather than having to work with representatives from different parts of the bank, such as legal, documentation, technology and operations, companies expect to have a streamlined experience. From the bank’s point of view, the single point of contact approach also makes it easier to track any issues that arise during the project.
By the same token, the most successful implementations tend to be those in which the corporation appoints a dedicated project manager. There will also typically be involvement from stakeholders, and escalation and input from senior management when required, but having a primary relationship between a single point of contact at the bank and a single point of contact at the corporation tends to work very well.
Beyond the project manager, it is essential that the corporation resources the project correctly and identifies all the internal stakeholders early on. In order to complete the relevant workflows within the project the correct people will need to be engaged not only within the treasury team but also in IT, accounts payable and accounts receivable. Stakeholder buy-in needs to be achieved at an early stage in order to drive the project forward across each of the teams affected by the project and to ensure that the scope of the project is correctly set up front.
Aside from appointing a single project manager to lead the relationship with the bank, companies can facilitate the implementation process by gaining a clear understanding of how their organisation operates at the outset. This is particularly the case for companies with a complex structure including multiple legal entities in a number of different countries. Where the scoping stage is involved, successful implementations tend to be those in which the corporation has undertaken a review exercise on their side in order to understand the business needs of their subsidiaries, capture all of their requirements accurately, and be able to articulate these requirements. Without wider stakeholder engagement on the corporate side, it can sometimes be the case, for example, that reporting is successfully implemented back to the corporate, the central corporate team confirms that it passes all the tests but then a department using the data from the reporting comes back, sometimes post implementation, to state that an important code is missing. A small, bespoke code, not called out as a requirement during the scoping stage, subsequently not tested against and which ends up being critical to what the corporate considers to be a successful implementation. This point can seem obvious but the importance of getting the right stakeholders engaged to take part in scoping cannot be over emphasised.
For companies looking to implement a multi-banking structure, the entire process will inevitably become more complex than for a single-bank implementation. If the company is dealing with a number of different financial institutions simultaneously, it will have to run multiple implementation plans which may include significant overlap in areas such as documentation. In order to navigate this successfully, significant project management discipline is required – particularly when tight deadlines and budgets are involved.
Typically companies tend to run their implementation projects in isolation from each other – so banks participating in the multi-bank solution wouldn’t usually be exposed to each other during the process. However, there is an argument that by initiating a more collaborative approach, the company may ultimately benefit from a more standardised solution.
One company, for example, was looking to move from proprietary file formats to a SEPA standard XML solution as part of a ten year plan focusing on standardisation and consistency.
Early on in the project, the company ran a two day session in which the participating banks were invited to sit around the table. The company representatives took the opportunity to talk through their solution and explain how they wanted to format their transactions and supply their data to each of the participating banks.
The company wanted its requirements supporting in a very specific way, thereby driving standardisation across a number of institutions in order to build a more cohesive solution. This particular project has resulted in a very successful implementation and the client has benefited by aligning its banks and taking ownership of the solution.
When a company is building a multi-banking structure the complexities around the implementation phase are compounded. As more companies adopt a multi-banking approach, they may increasingly choose to manage their banking groups on a more collaborative, transparent basis, thereby benefiting from greater standardisation, more effective planning and a more joined-up solution.
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