How Can Treasurers Simplify Their Banking Relationships Without Compromising on Efficiency?

The topic of banking relationship simpllification was the backdrop of the two-day Global Corporate Treasurers Forum Europe in 2011, held in at the Ritz Hotel in Paris. Treasurers shared their thoughts on what they expected from a relationship bank, and several treasury management professionals from around the world presented methods for improving treasury’s efficiency. In the author’s opinion, treasurers require the following: visibility to information; completeness and accuracy of this information; and timely accessibility to this information.

There is a plethora of information available to treasurers and their banks in the context of simplifying their relationship. However, there is a gap – albeit a virtual one – in converting this knowledge into implementation. This article is an attempt to make use of various pointers as the basis for building a model that can respond to the challenge of bridging this gap.

There isn’t one single solution that fits all in the world of treasury banking relationship, and with the added constraint of maintaining efficiency, it only makes the solution unique for every relationship.

The best place to begin is to look at the quality of the existing banking relationships from a treasurer’s point of view, and then examine how this relationship is impacting their efficiency. The rest of the article attempts to arrive at a way to measure these aspects to get a quantitative picture. As the saying goes, “what get measured, gets done”, therefore what gets measured has a possibility of being improved.

Measuring the Banking Relationship

Banking relationship can be measured by the Relationship Fulfilment Index (RFI). The RFI is a number between 0 and 1 that gives a sense of where a treasury banking relationship stands.

The Relationship Fulfilment Model (RFM), which helps create the RFI, is built on the following three aspects that govern the quality of a relationship:

  1. The degree of complexity in the processes that govern the relationship.
  2. The completeness and accuracy of the information exchanged.
  3. The timely accessibility to this information.

Cataloguing the various processes that the treasurer undertakes with bank(s) is the first step to understanding the degree of complexity in a treasurer’s banking relationships, and develops the Relationship Complexity Index (RCI). This is simply the number of steps that is ideally required for completing a process divided by the actual number of steps taken for completing the same. The minimum and ideal number of steps required for completing a process is 1. An RCI value of 1 indicates an ideal relationship, where the parties involved have become ‘one’, and this process has attained its simplest form.

To illustrate this point, take the process of knowing the daily balance of all the accounts. If a bank or an in-house treasury management system (TMS) provides the treasurer with a single place to access this information, then RCI value for this process is 1. However, if the treasurer has to take several steps for getting this information, then the RCI value would be lower.

Measuring the second aspect that governs the quality of a banking relationship – the completeness and accuracy of the information exchanged – will derive the Information Completeness and Accuracy Index (ICAI) for the processes. This is the total number of times information is accessed minus the number of times incomplete or inaccurate information was identified/reported and divided by the total number of times information has been accessed. A value of 1 is the ideal score, which means that there is not a single instance where a treasurer has to deal with inaccurate or incomplete information.

The final and most important aspect of the treasury-banking relationship is the timely accessibility of information, which is measured by the Timely Accessibility Index (TAI). This is the total number of times information has been accessed minus the number of times information was not accessible and divided by the total number of times information has been accessed. A value of 1 is the ideal score, which means that there hasn’t been a single instance where a treasurer did not have the information available in a timely manner.

Creating a weighted average of these indexes against each process and averaging these among these processes will produce the RFI. A RFI value of 1 indicates that the bank has completely fulfilled all the needs of the treasurer. A simple illustration of this is given in Table 1.

Table 1. Calculation of an RFI

Relationships RCI Weight Weighted RCI ICAI Weight Weighted ICAI TAI Weight Weighted TAI RFI/Process
Process 1 1 10% 0.1 0.6 40% 0.24 1 50% 0.5 0.84
Process 2 0.5 10% 0.o5 1 40% 0.4 1 50% 0.5 0.95
Process 3 1 10% 0.1 1 40% 0.4 0.5 50% 0.25 0.75
Average     0.083     0.346     0.416 0.845

Table 1 shows a mock RFI, based on the RFM. This indicates that Process 3 is an area where the treasurer should start to focus on and find out what can be done to get the information available in a timely manner. By creating this matrix for all the processes with a bank, a treasurer will have in-depth analysis of each process, which may lead to an increase in the RFI value. In the above example, the RFI value is 0.845, which indicates a healthy relationship, although with some scope for improvement.

Relationship and Efficiency

The RFM addresses only a part of the question, and does not take into account the efficiency aspect of treasury processes. Efficiency, in the context of treasury, will be calculated in the Efficiency Savings Report (ESR). Efficiency savings is the sum of the savings made when there is a decrease in how much time a treasurer needs to achieve a certain task and the savings made by doing more with the resources they already have without increasing costs or reducing effectiveness.

The efficiency savings should typically be one of the goals assigned to a treasurer. In some cases a treasury efficiency review process is conducted annually, which produces a report based on all the transactions managed by the treasury, and indicates the possible areas to improve efficiency. However, by deploying technology that continuously measures and reports efficiency savings, a treasurer, by combining the RFM and treasury efficiency savings, can pinpoint the processes that need to be looked at.

For example, timely accessibility of information could be low for certain process areas, and a treasurer would then guide their team and bank to look into those, while preventing the constraint of either increasing the efficiency savings or not reducing it. This model will then provide access to the process that requires improvement in the timely accessibility of information. The treasurer can then look at ways of improving it, for example, by making this information available on the internet or setting up an alert notification to his mobile.


Every banking relationship is unique for a treasurer, and what works or simplifies for one may not necessarily work for others. This model attempts to measure the relationship and arrive at a more quantitative approach to prioritise the process areas to focus on, so that each and every treasurer-bank relationship can provide mutual assistance and benefit.

There are several options to extend this model further. A bank’s overall performance can be revealed by getting the RFIs of all the treasurers it serves. The cumulative RFI value, when gathered by all banks, can then be used to calculate the industry average and create competitiveness between banks, thereby opening up innovation possibilities in simplifying relationships.



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