The company developed an innovative process that utilises a scorecard system to quantify bank performance and a ‘wallet share’ model to track banking expenditures vs business revenues from banks. It enables the company to select banks that best provide the required services and create reward incentives based upon their performance.

The challenge:

In the past, the relationships between Brocade and its banking partners were less than optimal. The existing process for bank relationship management was not structured, nor was it comprehensive. In fact, the evaluations on banking partners were mainly produced from fragmented feedback among the treasury staff.

Chris Hanson, Assistant Treasurer, explains “Brocade was not able to effectively assess overall connections between our banking partners and establish meaningful bank relationships.” As a consequence, the other business units in Brocade could not properly select the right banking partners for their specific needs because they were lacking an accurate assessment on their banks. The following issues needed to be addressed:

• Lack of systematic tracking of corporate banking expenditures vs revenues received from each banking partner.
• The gap between how treasury views their banks and how business owners view their banks. Evaluation’s scope was limited to treasury, other stakeholders were not involved.
• Lack of effective communications between Brocade and banks when it comes to performance issues or improvement areas.
• Inconsistent documentation in regards to overall performance of banking relationships.
• Lack of tools to evaluate and enhance bank relationships.

The solution:

In 2014, Brocade’s treasury established a bank relationship scorecard – an internal tool to determine strengths and weaknesses of each bank. Within the scorecard, specific cash management services by each banking partner were categorised into groups including bank products and customer services, capital management, administration, pricing, geographical footprint, and banking technology. The treasury staff graded the banks on a sliding scale from one (below expectation) to five (above expectation) and final scores were then calculated. Any time, if a bank rated below satisfactory, detailed reasons were given on a separate summary report. The results were communicated to the banks for follow-ups and improvements. Ultimately, it significantly improved bank services and relationships, resulting in higher customer satisfaction.

Angie Qian, Senior Treasury Analyst, explains “we used the tool to communicate with our banks regularly. It helped to objectively communicate positive and negative feedback and supporting documents to our banking partners. Our banks appreciate our candid feedback and re-committed when necessary to improve their services and pricing where possible.”

Furthermore, treasury developed a wallet distribution model to analyse banking expenditures and revenues with each banking partner. The wallet distribution is an effective tool to provide the company insight into the expense and revenue expectations of a specific banking partner. It facilitates quicker decision making around selecting the right partnership for major services such as debt refinancing and stock repurchases. The company is now confident that the decisions made involving banking partners maximise all of their banking relationships.

Best practice and innovation:

The treasury team was able to conduct intensive reviews and evaluations of its banking processes because of this holistic banking relationship solution. The successful rollout of the scorecard and wallet distribution was achieved within a short period of time. The solution enabled Brocade to quickly eliminate one of their domestic banking partners and enhance international bank structures, resulting in $300k annual savings in bank fees. It also played a key role in selecting the right banking partner for a cash management optimisation project.

Treasury’s leadership at Brocade in innovating a comprehensive scalable global banking relationship management solution has improved all areas of the organisation. Brocade’s treasury is changing the way the company is thinking about the banking relationships, by getting all areas of the company to work together proactively evaluating and managing their banking partners. “Our goal is to implement a creative and efficient solution that leads to optimal decisions and results for the business” notes Hanson.