I had the opportunity to participate in a Banking Request for Proposal (RFP) process for one of our clients last month, and would like to share insights and lessons learned.  This is especially timely, considering the recent news surrounding US-based Silicon Valley Bank and Signature Bank failures.
 
There is no “one size fits all” answer when it comes to defining the “right” bank for your business - and it may be that you need more than one banking partner (which I would recommend almost all the time) to satisfy the requirements of your business, while maintaining the right level of risk management and diversification.
 
Here are the 5 pillars - not in any particular order - that we considered as part of our selection process.  We determined these requirements based on the operational needs of the organization, alignment with the long-term strategic plan, and the highest ROI for our risk tolerance.
 
1. Relationship.  The importance of having a relationship banker was very important for this organization - we wanted to be able to pick up the phone and speak to someone without having to dial an 800 number.  We wanted to be able to solve issues quickly and make sure our employee’s time is spent working in and on the business, not on hold.  Additionally, we wanted a bank that would provide a proactive approach to supporting our business needs. 

2. Risk Management.  Fraud is rampant these days, and we wanted to set up a treasury management system that would mitigate the risk of fraud to as close to zero as possible.  We needed access to tools and systems for a variety of scenarios.  Specifically, we identified check fraud as one of our largest risks, and required access to an ACH payment system to limit the use of checks, and where checks are absolutely necessary, the use of a “positive pay” application that allows us to approve checks before clearing. 

3. Digital Access and Control Points.  Accessing online banking, treasury management and credit card systems easily, securely and in an integrated fashion was very important to the organization.  We specifically needed to be able to manage and adjust credit card approval limits for employee cards in real time, due to the timing and nature of certain travel and organizational requirements.  Limiting the amount of passwords and usernames was important as well. 

4. Interest Yield and Liquidity.  The interest rate environment has changed drastically over the past 18 months, and the opportunity cost of idle cash became material.  Managing cash flows and maximizing the ROI on our cash deposits while maintaining liquidity is very important to the organization as it has grown. The products we needed would have to be flexible, secure and profitable. 

5. History and Financial Health.  The timing of this selection process occurred before the SVB and Signature Bank collapse - but we knew this would be an important part of our decision.  Each bank provided us with ‘the history of their bank’ to further explain capitalization, liquidity and financial management of their assets. 

Using the 5 pillars above, we identified the best bank for the business with confidence and certainty, knowing that this is a process we should undertake every couple years.  We learned a lot through this process, and would be happy to share our insights, learnings and network with other businesses in the community.  
 
The overarching message to business owners and lessons learned = Be proactive about managing your business finances and surround yourself with a team that catalyzes growth and development!