Summary - Lead a review of core banking platform contract and remediate issues.
Situation - M&T Bank, an American bank, plans to open a UK Branch in London to increase market share within European Global Capital Markets.
Following a competitive procurement process, the Bank had selected a cloud based core banking platform, systems integrator and other key banking providers.
This large, complex and high-risk project needed to be delivered within the Financial Authorities (FCA) regulatory time window.
CBS had previously supported M&T define the technical requirements and architecture design.
In March 2023, the commercial negotiations between the bank and the core banking platform provider had broken down. The banks executive team were becoming increasingly worried about the viability of the contract, value for money and the balance of risk between the parties.
Task - CBS were asked to urgently support the bank and provide assurance to the Chief Operating Officer on the contractual positions reached through the negotiation to date, and confirm whether the contract was, or could be capable of signature.
The bank was under extreme time pressure and had to make a final decision whether to proceed or abandon the procurement within a two week window, this was in order to be able to meet its regulatory obligation timeframes.
Action - CBS’s commercial lead, brought extensive market and commercial experience to the support the banks understanding as to the extent of the issue. CBS undertook at pace a detailed review of the contract, identifying a significant number of risks including the providers ability to suspend or terminate the service which would potential leave the bank unable to operate, comply with its regulatory requirements and the banks customers unable to access their funds. A number of key dependencies and issues were also identified in the review requiring the bank's immediate attention.
CBS created a Risks, Assumptions, Issues and Dependency register (RAID log), prioritising each based on CBS’s experience. CBS provided recommended mitigating action for each risk, issue and dependency, and a recommended strategy in order to conclude the negotiations and secure an agreement with the service provider capable of being executed.
Following the bank agreement to the RAID log and authorisation to proceed with the recommended strategy, CBS lead the negotiations in collaboration with the Bank’s core team (legal, finance, technical, procurement and operations).
The approach applied was an intense five day face to face negotiation; one day for internal preparation, three days of supplier negotiations (only key decision makers where permitted to attend) and one day to finalise any remaining items. Contractual principles as and when agreed, were documented and drafted into the contract in real time to avoid any misunderstanding.
Result - The outcome was at the end of the five days the balance of contractual risk between the parties was properly aligned including the removal and reduction of termination or suspension events. The financials had significantly improved with the extension of capped known costs from 2 years to 10 years, and the relationship between the bank and the service provider had move from one of distrust to a win a win situation.
The contract was recommended for approval and was signed within a week of concluding the negotiations.
CBS continue to support the bank following the outcome of this case study, and are currently supporting the development and implementation of the banks supplier management programme, outsourced service exit strategies and ongoing 3rd party risk assessments.