Involving key stakeholders and procurement as well as having an enthusiastic project manager is key to successfully changing banks, treasurers told the BNP Paribas Cash Management University in Paris.
Andrea Boettger, treasury director at Jabil, and Monica Eriksson, manager of cash management services at Ericsson, were jointly interviewed about their recent experiences when changing banking partners and how this can be done without disruption to the business.
What instigated the change?
Boettger was considering revisiting Jabil’s cash management services to ensure the business was using the best service providers when she was informed that RBS was exiting the cash management business.
Jabil operates globally with a strong European presence. “We decided to only focus on Europe because we had RBS as our regional bank,” said Boettger.#
“We wanted to move first and find a new cash management bank to support us because we had the concern that people would be leaving RBS and the services we would be able to get would decline”
“We wanted to move first and find a new cash management bank to support us because we had the concern that people would be leaving RBS and the services we would be able to get would decline,” she said.
Ericsson also switched to BNP Paribas due to the Scottish bank exiting the cash management business.
“With a tight time schedule, it is very easy to just cut and paste. We had to meet our deadlines. We have to pay out vendors and we need to collect from our customers,” said Eriksson.
Despite this, Eriksson and her team took time to consider what could be changed or improved on in their current banking relationship. She looked at which banks could offer a more global footprint or more local products, for example.
Who should be involved in the decision-making process?
“One thing that I thought played out very well was that we had all of the company’s key stakeholders involved from the start,” explained Eriksson.
This was true even during the request for proposal (RFP) processes.
“We involved people from accounts payable, our shared service centres and our payment factory. We had people from HR involved because we had to move payroll too, of course. Treasury was also involved,” explained Eriksson.
Boettger stressed the importance of involving the company’s procurement team in the decision from the start.
“They need to understand why you chose that specific bank,” Boettger said.
“We used a scoring system which helped people to feel like they had a say in the bank we eventually chose,” she added.
This is also an important part of change management, according to Boettger.
How to make the decision
When it came down to shortlisting a bank, Boettger gave each of them the opportunity to submit questions via email. A conference call was held with all of the prospective banks in which each question was answered.
“We wanted to make sure we had common ground with all of the banks to ensure we didn’t have any misinterpretation. All the banks then had the same basis to reply to our RFP,” she said.
“We had a very detailed and structured RFP,” she added.
The RFP was chosen in April 2016. Jabil selected its bank in June and started the project in July. The KYC processes were in place by September and the project “went live with a big bang in December,” explained Boettger.
After leaving their previous bank, RBS, Boettger’s final decision came down to Citi and BNP Paribas. Her team had intensive meetings with both banks over several days before making the final decision.
This started to build a strong relationship with BNP Paribas which provided a solid framework for their ongoing partnership.
Making the change positive
Switching from RBS to BNP Paribas ultimately led to Ericsson saving money as the company was able to reduce the number of bank accounts it had.
“We are present in 180 countries which, from my perspective, is challenging and exciting finding cash management solutions,” Eriksson explained.
“We had the opportunity to reduce our bank accounts significantly, so we went from 140 to just over 90 accounts, creating a cost reduction. It was a win-win.
“We were aware this could be a benefit when changing banks, but that was significantly better than we were expecting”
“We were aware this could be a benefit when changing banks, but that was significantly better than we were expecting,” Eriksson added.
The company now has most European accounts in the Netherlands or Sweden, unless absolutely necessary. This allowed the company to close local banks in countries such as Portugal, she said.
“We also wanted to take the opportunity to standardise payment processes and revisit our SAP system too,” Eriksson explained.
“We are currently in the tender phase of selecting a cash management platform,” she added.
What would you do differently if you did it again?
“If I was to do it again, I would ask more detailed questions from the start,” Eriksson advised.
She also stressed the importance of having a capable and enthusiastic project manager when change banks.
“I had to fight a bit for the right person. This person was not actually a cash management specialist. That would have been good, but having good project management skills is vital,” she explained.
He kept everyone on track and kept enthusiasm high throughout, according to Eriksson.
Of course, the project manager does not only have to work with the new bank but also the old one as old operations, such as cash flow, need to be closed too.
Eriksson joked about the music that her project manager played once the project was completed. “It’s important to have fun,” she said.
Boettger said she would invest more time into the RFP processes.
Read more coverage from BNP Paribas’ Cash Management University, hosted in Paris in December 2017, here: