Learning Objectives:

  • Explain the importance of bank relationship management.

  • Describe the process of selecting and managing banking partners.

  • Understand how to manage and evaluate bank performance.

7.1 The Strategic Importance of BRM
Bank relationship management (BRM) is a core function of the treasury department . Managing relationships with financial service providers ensures access to credit, competitive pricing, and reliable service delivery .

7.2 Managing Banking Relationships
Effective BRM involves several key activities.

  • Evaluating and Selecting Bank Partners: Using a Request for Proposal (RFP) or Request for Information (RFI) process to select banks based on financial stability, service capabilities, geographic reach, and technology .

  • Managing Bank Performance: Setting Key Performance Indicators (KPIs) for banks and conducting periodic reviews .

  • Negotiation: Negotiating pricing and service levels .

  • Counterparty Risk Management: Diversifying banking relationships to avoid over-reliance on a single institution and monitoring credit risk .

7.3 Bank Fee Analysis
Analysing bank fee structures is essential to ensure they are competitive and cost-effective . Per-transaction and wallet-paid compensation models are used .

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