Redbridge Analytics’s Checklist on “How to get the most from your Bank Fee Negotiations” shows how to how to prepare for bank fee negotiations with your banker, but to do this successfully, corporate treasury departments need the basic processes and tools to be able to carry this out.

Bank account management report

Earlier this year, FIS published the results from their survey of over 200 treasury professionals to better understand the challenges corporations continue to face around their bank account management processes and how they can overcome them. Key findings from the 200+ corporates included:

• 62% found different processes in each FI 
• 64% do not have a tool to analyze account statements
• Only 28% have a bank account management tool
• All responding corporates open and close bank accounts regularly: 14% open and 9% close 5 or more every month
• Bank account management challenges exist in these five areas
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  • Source & Copyright©2018 - FIs
• Manual bank fee analysis processes lead to high costs.

FIS concluded, not surprisingly given they have one of the leading bank account management and bank fees analysis programmes, that corporate treasury departments need to leverage technology to drive automation across bank account management and bank fee analysis processes. Key features of successful bank account management programmes are:

• Gaining visibility with central repository
• Tracking all user actions to create audit reports
• Generating FBAR reports for better regulatory compliance
• Supporting import of EDI822, TWIST (BSB), CAMT.086 version 1 and 2 and CSV files for account analysis.

Corporates have the power, if ……

Steve Wiley, Vice President, Treasury Solutions, FIS believes that, corporates now have the power in corporate bank relations: “The treasury and transaction banking space has become so fiercely competitive among banks, corporates have more power than ever in negotiating fees. The business of managing cash for companies and providing trade finance has been the biggest driver of revenues for global banks since 2011, when it overtook banks’ equities and fixed income divisions. Transaction services also eclipsed lending revenues for every year since 2011. Banks are doing more than ever to attract and retain treasury customers – treasurers have to recognize this and use it to their advantage.”

But, Wiley points out, that unless corporate treasury departments overcome the staffing problem they will not be able to exploit their position:

• Corporate treasuries are often understaffed in bank account administration function. The ROI on a dedicated bank account admin function has never been higher – having an employee focus on global bank account rationalization and fee analysis will be critical for large global corporates going forward.
• Technology is critical for automating bank fee analysis monitoring on an ongoing basis, and to compare fees across banks to help in negotiations. Corporates should let their banks know they are investing in technology to analyze and reduce bank fees – they will have their full attention with a project of this sort.
• The RFP is still the single most effective way to reduce fees across banking partners. A best practice is to RFP the banking business every 3 – 5 years.

Wiley concludes that, “At the end of the day, corporates are paying too much for banking services because they are understaffed, underinvested in technology, and underestimating their negotiating ability. We’re seeing far more bank fee optimization projects, using our eBAM technology, to exploit their power.”

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CTMfile take: Bank account management packages and services now just work, there is no excuse for any corporate treasury department not using one and exploiting their bargaining advantage in their bank relations world-wide.