Ongoing Relationship Management
Many factors may lead a government to change banks. However, changing
banks is costly and time consuming. New checks must be ordered, old check
stock must be destroyed, banking instructions for Fedwires and ACH transactions
must be updated, and staff must be trained on new bank systems.
Nevertheless, the finance official should conduct a periodic evaluation of the
government’s banking relationship.
Questions to consider in evaluating a bank’s performance include the
following (Lockhart 2004):
Does the bank provide all the needed services?
Are the bank’s rates on deposits competitive?
Local Government Cash Management 49
Does the bank have an aggressive availability schedule?
Does the bank have state-of-the-art technology?
Do bank personnel communicate with the government’s staff effectively?
Is the bank responsive to questions from the government’s staff?
Are problems resolved quickly and to the satisfaction of all parties?
In many cases, the finance official and the banking relationship officer
have a long-term affiliation. The bank may be familiar with the government’s
treasury operations and may have addressed those needs over the years.
While the relationship may be beneficial from an operating standpoint, it
may not be from a cost standpoint. The finance official should weigh the
advantages of an established relationship against the potential cost savings
and improved services resulting from a new bank relationship.
Ac