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Tips on Evaluating and Choosing the Right Banking Provider

April 15, 2013
By Michael Fina Vice President /  Institutional Banking, First Trade Union Bank

When was the last time you took a serious look at the fees you are currently being charged for banking services?  If it has been a while, you might be in for a surprise.

Selecting the right banking partner for your union organization is an important yet complex process.  It is important to identify the needs of the organization and match the banking products and services accordingly.  To do this all at a cost that is not burdensome to your organization can be a difficult task.

At First Trade, I have been involved in many Requests for Proposals (RFP’s) from union organizations looking to evaluate competing banking service providers.  While these proposals can vary greatly in content and complexity, there are several important considerations unions should know when choosing a banking partner and crafting an RFP.

Introduction:

Your goal, at the end of this process, is to find a banking provider that best understands and fits your needs.  Use the introduction to provide some background on your organization and why it is seeking proposals in the first place.  Conversely, it’s appropriate to ask questions to the responders about their financial condition, debt ratings, Tier 1 ratios and Veribanc rating. 

A good introduction should elicit information about the bank’s experience with organizations such as yours.  Does it serve other unions, and if so, what is its experience with unions?  Are they supportive of union causes and do they finance non-union projects?  Who at the bank oversees the relationship and who supports the relationship manager when he or she is not available? 

Scope of Services:

This is considered the most important part of any proposal and the one that will require the most thought on your part.  This is the section where you want to ascertain, in as much detail as possible, how the bank will serve the needs of your organization.  Ask questions about deposit processing, funds availability, ACH and wire transfer policies.  Understand its policies and procedures for online transactions.  Discuss the fees associated with these services at your organization’s volume.

This is also a great time to talk about product and service enhancements that might be worth incorporating into your business requirements.  Fraud protection and cash management services, for example, are being added to most bank’s product portfolios.  This is the time to determine if they make sense for your business needs.  Be specific in how you want answers to capabilities, costs and services.

Don’t forget to ask about the bank’s reporting and statement services.   Get copies of their existing statements and access to their online banking demo.  Also, make sure you understand the banks capabilities for document storage and retrieval.

Bidding Instructions:

In preparing an RFP, be sure to spell out the timetable and key dates.  Will your organization be available for a conference call to address questions, if so when will the period end?  Be explicit in the form and number or responses you want back with an unequivocal deadline.  If you plan on conducting follow up face to face meetings, spell that out so that calendars can be blocked.  Ask for references and their contact information.

Proposal Evaluation:

Before you begin the process, make sure the organization and all the stakeholders agree as to what the selection criteria will be.  How will you decide from a number of qualified candidates if you internally have conflicting ideas of what’s most important?  Articulating your selection criteria will certainly help internally, and will help responders to shed light on those elements most important to you.

Regular Ongoing Evaluations

Once you have selected the bank that is right for you, establish mutually agreed-upon reviews with a frequency that makes sense for the level of business: quarterly, semi-annually or annually seem to work for most customers.  Use these business reviews to look at pricing trends and to project volumes and costs for the period until the next review.  Use this information to make better budgeting decisions and to fix your expenses for the time period to ensure you are not overpaying for your banking services.

As with most anything, the more you put into crafting the proposal and evaluation process, the more you will get out of it.  And, as always, if there is anything I can do to help, please don’t hesitate to ask.

Michael Fina, Vice President / Institutional Banking for First Trade Union Bank, works in the company’s New Hyde Park office and is responsible for generating new relationships with public and private sector unions throughout New York State.  Mr. Fina can be reached at 516-874-9601 or mfina@ftub.com.  In the coming months, Mike will be providing commentary and insight into banking issues and how they impact union organizations.

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