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Banking on a good deal for the public sector

The banking needs of the public sector are complex and varied with all organisations from education to social housing or local authorities having their own specific requirements. From credit facilities, chip and pin terminals to bill payment services the sector’s banking needs are diverse, so when looking to procure banking services, they need to find a specialist bank that can understand the individual challenges they face, writes Shradha Shukla.

The procurement process behind choosing banking services can also be a complicated business. If above the EU financial threshold, a lengthy tender process will be required and many banks may not be equipped to meet certain specific needs of public sector organisations.

The good news is that there are a number of banks that specialise in the delivery of banking services for the public sector and ESPO, a not-for-profit, professional purchasing organisation, recently launched a new banking framework to make the procurement of banking services as simple and convenient as possible for its customers.

This framework is available to all public sector organisations including schools and academies, local authority establishments, police and emergency services, National Health Service bodies, central government departments and their agencies and registered charities.

A framework is a commercial agreement that sets out the terms and conditions on which specific purchases can be made throughout the duration of the agreement term. It is a legally-compliant route to market, providing purchasers with access to a range of approved suppliers who have undergone a rigorous vetting process.

The launch of the framework in May 2014 came at an opportune time for over 100 local authorities following the Co-Operative Bank’s announcement that it will no longer be able to provide them with banking services, as it looks to narrow its focus on retail and small business customers.

This created a challenge and an opportunity for the public sector, as the Co-Operative Bank’s ethical stance meant that it was the supplier of choice for many organisations. As a result of this change they had to go back to the drawing board to find the right banking provider for them.

After carrying out a fully compliant EU tender process, three banks were successfully appointed on to the framework. Barclays Bank, Lloyds Bank Plc and Royal Bank of Scotland offer a range of banking solutions as part of the framework. The benefits of procuring banking services via a framework are that the banks have all agreed to terms and conditions as part of the framework, meaning that customers will not need to undergo lengthy and complex negotiation processes with the banks directly to access the best deals. ESPO has also worked closely with all the banks to create guidance and template documentation to assist customers with their procurements.

Customers of the ESPO banking framework can access a range of banking services to suit their requirements. The framework is comprised of the three following Lots:

  • Lot 1 – General banking services – Payment accounts, direct credit accounts, receipts accounts, rent allowance accounts and cash and electronic banking facilities
  • Lot 2 – Merchant acquiring services – Processing of card transactions, processing of card refunds, card processing terminals
  • Lot 3 – Bill payment systems – Electronic file download of transaction data, plastic card transactions, high security of funds in transit to customer account and integration with other customer systems

ESPO has also assessed the banks based on past performance, experience, technical and professional ability and compliance with the FCA and PCI DSS standards.

All contracts awarded under the framework can be customised to meet the specific needs of the customer, safe in the knowledge that they are supported by a robust and regulatory set of terms and conditions.

This framework has already successfully achieved some great savings for its customers. One district council has secured a saving of 23% on their banking requirements by utilising the ESPO framework.

Most banks are not traditionally geared towards the needs of the public sector, making the process of selecting the right bank a difficult and complex one. Framework agreements help to alleviate this issue by agreeing special public sector terms with a range of banks based on the requirements of most public sector bodies.

Shradha Shukla is Buyer, Professional Services at ESPO , the Eastern Shires Purchasing Organisation


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