This is a bank rationalisation project (BRP) covering 58 countries which were divided into ‘clusters’ – eight global banks were selected and the project demonstrates best practices not only in cash management but in relationship and change management.
Photo of Sanjay Sethi, Citi, Ashwin Ramji, World Vision International and Daniel Hanna, Standard Chartered.
Global Assistant Treasurer
World Vision International is a global humanitarian, relief and advocacy organisation with annual turnover of approximately $2.7bn. It presently has operations in approximately 70 countries covering North, Central and Latin America, the Middle East, Northern Africa, and Sub-Saharan Africa, Western, Central and Eastern Europe and Asia.
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As is typical of many global development organisations, the operations of World Vision International (WVI) are highly decentralised, including the choice of banks used worldwide, and decisions regarding bank account structures and other banking services. As a result, the organisation presently has over 2,000 bank accounts and over 200 bank relationships.
For years, WVI’s Global Treasury (GT), which was created in 2005, has focused on educating the organisation’s leadership on the need for greater visibility and control of cash. With senior management support, GT launched a bank rationalisation project (BRP) in 2015, covering 58 countries (the remaining countries were excluded for logistical reasons). The BRP is divided into three distinct phases: request for proposal (RFP), solution and implementation.
In the RFP process, GT selected eight global banks that were financially stable, had strong correspondent banking networks, were able to demonstrate innovative cash management solutions and had geographical footprints complementary to WVI.
By selecting banks with global presence, GT assumed that these banks would be able to leverage their scale to offer WVI’s country offices the most competitive corporate pricing and service, even if local volumes and costs warranted less.
To ensure that the banks remained competitive across all countries (rather than ‘cherry-picking’ the most desirable countries), GT divided WVI’s countries into clusters that overlapped multiple banks’ footprints, and instructed banks to bid on clusters rather than individual countries. Thus, banks were required to be competitive in countries such as Somalia and South Sudan if they wanted to win high-value countries such as Kenya.
GT proceeded to survey country staff to assess their existing payment volumes, cash requirements and so on. This data was provided to participating banks by cluster, with sufficient time for the banks to present their solutions.
While the evaluation process was time-consuming, GT successfully partitioned its 58 countries amongst the eight banks. Some banks were clear favourites in specific clusters, but in general every bank was competitive in the clusters upon which they bid, which made the decision process difficult.
Nonetheless, GT believes that the final allocation provides sufficient business to each bank to ensure that they provide the highest quality of service to WVI, while ensuring that GT’s bank exposure is consistent with its counterparty risk appetite. Some banks were disappointed not to win all the clusters upon which they bid, but all nonetheless commended GT on its approach and understood its desire to maintain good business relationships with their competitors.
The solutions and implementation phases are now underway. Selected banks have performed extensive due diligence on each country office’s payment and cash requirements, and designated global implementation managers to ensure that solutions balance global and local objectives. This process has proven especially challenging for WVI’s banking partners, who are accustomed to clients telling them what product or service they require. In this case, banks were asked to evaluate each country office’s cash management needs and footprint, and recommend appropriate solutions that, in most cases, rely on widely available technology, or partnership banks and money transfer agencies. Over the long term, this approach ensures that banks remain invested in meeting WVI’s demands since solutions are not tailored to each bank’s offerings, but to country offices’ specific cash and liquidity management needs.
Best practice and innovation
Throughout the RFP process, GT has fielded questions about how much change will actually occur given WVI’s focus on unreached areas. As Ashwin Ramji, Global Assistant Treasurer, WVI, says: “Our response is simple: this project is already a win for the organisation, for we are no longer reacting to local decision-making, but proactively working with our global banking partners to develop solutions that are truly appropriate for each local context.”
Like many of its non-governmental organisation peers, WVI did not have a good history with implementing radical change in a centralised manner and GT encountered tremendous resistance to this bank rationalisation project.
The team nevertheless remained determined, convinced that WVI would realise substantial benefits if it could achieve its goal. “I truly believe that the GT team not only demonstrated best practice in cash management and relationship management, but equally in change management,“remarks Ramji.
“Winning the prestigious Adam Smith Award for relationship management validates WVI's decision to develop an internal treasury function a decade ago. At the time, most global development organisations had not centralised treasury or other critical support functions, choosing instead to devolve key decision-making responsibility to local offices. But over the past ten years, Global Treasury's management (led by Kathryn Powers, Head of Global Treasury, and Ashwin Ramji, CFA, CTP, Global Assistant Treasurer) has successfully persuaded WVI's senior management that a centralised treasury function can enhance the organisation's ability to serve disenfranchised global populations. With senior management's support, Global Treasury has progressively transformed itself from a foreign exchange risk management group into a world-class treasury function, with management responsibility for cash, investments, foreign exchange and insurance. Receiving the Adam Smith Award for relationship management is incredibly meaningful to WVI, not just because it proves that senior management made a wise decision a decade ago, but also because it demonstrates that Global Treasury's leadership built a function that is recognised for excellence by its corporate peers.”
As solution and implementation phases are underway, many of the key benefits are still to be realised. These include: bank account rationalisation, process efficiencies, cost savings and increased payment security.
The RFP process demonstrated best practice relationship management and change management.
GT now has greater confidence in its cash management footprint.
Established banking partners instrumental for the present and, as WVI’s operations evolve, in the future.