In the fast-evolving world of financial services — where AI, core modernization, and open banking are driving unprecedented change — the request for proposal (RFP) remains a foundation of procurement for many banks. Recently, I read an article by Carey Ransom in which he argued in The Financial Revolutionist that the traditional RFP process may feel increasingly outdated in today’s agile, dynamic environment. Ransom advocates for scrapping RFPs in favor of more flexible, iterative approaches — a perspective I partially agree with but believe needs nuance in the context of banking.

While RFPs can indeed impose constraints, they serve a critical purpose in an industry where decisions often involve multi-million-dollar contracts and require rigorous justification. At CCG Catalyst, we’ve guided countless financial institutions through this process, and I’d like to explore the pros, cons, and potential evolution of RFPs in this transformative era.

The pros of RFPs: structure, accountability, and justification for high-stakes decisions

1. A structured framework for complex decisions

RFPs provide a disciplined approach to vendor selection, which is invaluable for intricate projects like core modernization or implementing AI-driven solutions. They ensure that requirements such as real-time data processing or technical compliance attributes are clearly defined and systematically evaluated. In banking, where decisions can impact thousands of customers and involve contracts worth millions of dollars, this structure is often necessary to align stakeholders and mitigate risks.

2. Transparency and support for high-value decisions

Banking is a heavily regulated industry where transparency and accountability are nonnegotiable. When a bank commits to a multi-year, multi-million-dollar contract, say, for a new core system or fraud detection platform, it needs a documented audit trail to justify its choice to its board, regulators, and auditors. RFPs create a level playing field, reduce the risk of bias, and provide a clear rationale for high-stakes decisions.

3. Driving accountability from vendors

A well-crafted RFP compels vendors to provide detailed responses on functionality, pricing, timelines, and support. This granularity is crucial when evaluating emerging technologies like AI, where capabilities can vary widely depending on the use case. For instance, an RFP can help uncover hidden costs or gaps in a vendor’s ability to integrate with open banking ecosystems — issues that might otherwise surface only after implementation.

The cons of RFPs: inflexibility and slower decision-making

Ransom’s critique of RFPs resonates on several levels, particularly in the context of today’s fast-paced innovation cycles. Here are some of the drawbacks he highlights, which I’ve seen play out in banking as well:

1. Inflexibility in a rapidly evolving landscape

Ransom argues that traditional RFPs, with their rigid requirements and lengthy timelines, risk locking organizations into outdated solutions. In banking, where AI algorithms, open banking standards, and fintech innovations evolve rapidly, an RFP written 6 months ago might not account for the latest advancements — say, in generative AI or cloud-native core systems. This can stifle innovation and lead to missed opportunities.

2. Time intensive and resource heavy

The RFP process can take months, which, as Ransom notes, clashes with the need for speed in today’s market. For community banks, the resource demands of managing an RFP can be particularly burdensome, diverting attention from other priorities. In an era where competitors are racing to launch open banking APIs or AI-driven chatbots, this delay can be a competitive disadvantage.

3. Masking deeper organizational issues

Ransom points out that RFPs often serve as a “Band-Aid” for poor internal communication, with departments using the process as a substitute for meaningful collaboration. In banking, I’ve seen this lead to misaligned requirements that address symptoms rather than root causes, resulting in solutions that fall short of strategic goals.

Modernizing the RFP: blending structure with agility

While I agree with Ransom that the traditional RFP process has limitations, I believe it’s premature to abandon it entirely. Instead, we can modernize it by integrating some of his proposed alternatives while preserving its strengths. Here are a few ways banks can strike that balance:

1. Adopt a hybrid approach

Ransom suggests collaborative discovery workshops and phased “crawl-walk-run” strategies, which I’ve seen work well in banking. For instance, before issuing an RFP for a new core system, a bank might conduct workshops with vendors to refine requirements or run small-scale proofs of concept (PoCs) to test capabilities. This hybrid approach ensures flexibility while maintaining the structure needed for high-stakes decisions.

2. Focus on outcomes, not just specs

Ransom’s idea of problem-based engagement sharing core business problems rather than rigid specs can enhance the RFP process. By emphasizing desired outcomes (e.g. improved customer experience or faster fraud detection) banks can give vendors room to propose innovative solutions, especially in areas like AI where the best applications often emerge through experimentation.

3. Leverage expert guidance

Partners like CCG Catalyst can help banks streamline their RFPs, ensuring they ask the right questions — whether it’s assessing a vendor’s roadmap for AI automation or their ability to integrate with open banking ecosystems. External expertise can also help incorporate iterative elements, like PoCs, into the process without sacrificing accountability.

4. Recognize when RFPs are essential

Ransom acknowledges that RFPs may still make sense in cases like regulatory mandates or high-risk decisions. In banking, this is often the norm rather than the exception. When public funds are involved, or complex multi-vendor systems require well-defined interfaces, the RFP’s structure and documentation are indispensable.

A tool worth refining, not discarding

Ransom’s call to rethink RFPs is a valuable provocation, and his suggested alternatives — collaborative workshops, phased approaches, and outcome-focused engagements — offer a roadmap for greater agility. However, in banking, where decisions often carry million-dollar price tags and require rigorous justification, the RFP remains a critical tool. Its ability to provide structure, transparency, and accountability cannot be easily replaced, especially in a regulated industry where every choice must withstand scrutiny.

At CCG Catalyst, we believe the future lies in refining the RFP process, not abandoning it. By blending its strengths with more dynamic, iterative approaches, banks can harness the best of both worlds, ensuring they remain agile enough to adopt cutting-edge technologies while maintaining the rigor needed for high-stakes decisions. The RFP isn’t dead; it just needs to evolve for the digital age.