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Accessibility to bank transaction usage and fee information is critical!

Dan Gill, Senior Director, Redbridge Analytics

We are at a critical point in the history of monitoring bank fees and managing bank relationships.  Around the world, treasurers are discovering the importance of monitoring their bank transactions by examining both the usage and cost.  In many cases, banks remain the only vendor that does not provide cost or usage information on the services provided.  The treasury service industry bills corporations over US$500B globally every year and yet many companies purchasing these services perform little or no oversight into what they are buying.  In today’s fast paced, global marketplace, full visibility into the usage and cost of bank transactional services is essential.  The days of the paper bill have passed; it is time for banks to provide global electronic billing and reporting on how you consume bank services.

How bank fees are charged around the world

Bank fees are charged differently between the US and most of the world.  In the US, banks issue an “account analysis” statement showing aggregated service volumes for each account on a consolidated statement.  The contracted price is then applied to the service volumes and collected through a direct debit of an account, or by invoice.  This process stands in contrast to accounts outside the US, where the transaction fees are typically taken at the time of the transaction and then reported in arrears on a billing report.  Besides fee calculations, another area of difference is with file availability around the world.  In the US, nearly all of the major commercial banks can provide the ANSI/X12 EDI 822.  While outside the US, there are now multiple options for banks to provide currency and country independent service billing information with the Bank Service Billing (BSB) file format. This format has officially been adopted by ISO 20-022 as the camt.086.  From treasury’s perspective, the availability of these file formats should open the doors to having complete visibility into their global cash management services and costs.  There is no longer any technical reason why a bank cannot report the usage or fee information for any account in the industry standard BSB format. 

Demand BSB files

Some banks provide these industry standard file formats for any country where they do business.  Other banks only provide these files for certain countries or regions, while others will only provide these files to certain high value customers.  The only way banks will know of the need to provide the industry standard BSB files is if their customers demand them.  Regardless of the technical or business challenges banks face to comply with industry standards, corporate treasury must step up to demand usage and fee reporting for any account, anywhere in the world.

Challenges within the banks

Service usage and fee billing in some banks is complicated by the fact that they do not have a global billing platform.  Without a centralized collection of global volumes and charges it is difficult for these banks to gather the information necessary to provide transparency into the fees that have been charged.  In these cases, a bank is faced with the challenge of building and providing a BSB file in each country independently or manually centralizing the information before creating a global file.  This is no small challenge for some banks, as it requires a double aggregation of data that has not previously been reported to customers.  First, the total volume of each transactional service must be collected from all of the activity in each account for the month.  Then, the customer specific pricing for each service line item is added in order to report the total amount that was charged for each service.  Finally, customer’s accounts within each country must be combined with the accounts from other countries in order to provide a single consolidated report of all activities in all accounts.  The technical challenges of these steps are significant even before considering the format in which the client receives the information.

Solutions are available

Fortunately, solutions are now emerging to help banks handle the calculations necessary to provide global customer reports. These platforms use the same processes and systems their customers utilize to aggregate the reporting they receive from their banks.  These solutions also promise to lessen the challenges faced by banks looking to provide their customers with service utilization and fee visibility. 

Armed with this knowledge, now is the time to reach out to your banking partners to start receiving your bank service usage and fee information in an industry standard format.

This item appears in the following sections:
Bank Relationship Management & KYC
Bank Fees Reconciliation & Negotiation
Evaluating Banks' Overall Performance

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