current treasury pricing & industry trends panel discussion
TRANSCRIPT
Researching the Financial Services Industry Since 1983.
Current Treasury Pricing & Industry Trends Panel Discussion
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Topics of Discussion
• Overview of the Regulatory Changes & General Industry Trends
• FDIC Insurance (naming, elimination, money leaving FI to investment banks)
• Hybrid Accounts (creation of hybrid products)
• Historical rate environment – projections for the future
• Mobile and Virtual Banking
• Durbin Amendment
• RDC – consumer vs business space
• Treasury Packages
• Corporate Credit Cards
• Final Thoughts
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FDIC Insurance Name Change
Overall 88% of institutions surveyed intend to change the name or description they currently use to identify their FDIC Charge.
• 36% of these institutions plan to use the term “Deposit” in their new FDIC naming convention (i.e. Deposit Fee, Deposit Assessment, Deposit Coverage)
• 35% of institutions surveyed overall indicated they were undecided in the terminology they will use for new naming convention.
• 7% of these institutions intend to keep the term “Insurance” in their name.
• Only a single institution in the $10-$20 Billion asset range indicated that they do not intend to remove the term “FDIC” from the naming convention.
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FDIC Insurance – New Names
Account Balance Assessment
Account Balance Fee
Administrative Fee
Administrative Charge Fees
Analysis Fee
Analyzed Account Charge
Assessment Fee
Balance Assessment Fee
Balance Based Charge
Balance Deposit Fee
Balance Fee
Balance Management Fee
Bank Administrative Fee
Bank Administrative Fee/Regulation Fee
Commercial Balance Assessment
Deposit Account Usage Fee
Deposit Administration Fee
Deposit Assessment Fee
Deposit Balance Fee
Deposit Balance Maintenance Fee
Deposit Balance Protection
Deposit Coverage Fee
Deposit Fee
Deposit Insurance – Bank Assessment
Deposit Insurance Allocation
Deposit Insurance Assessment
Deposit Insurance Fee
Deposit Protection Fee
Deposit Security Fee
Deposit Service Assessment Fee
Deposit Services Fee
Deposit Supervisory Fee
Insurance Allocation Fee
Insurance Fee
Insurance Recovery Charge
Recoupment Fee
Regulatory Assessment Fee
Regulatory Balance Fee
Regulatory Fee
Supervision & Assessment Fee
Supervisor Assessment
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Hybrid & Interest Only Accounts
Hybrid Commercial Checking: •Traditional – This is the most traditional hybrid product offered by most institutions . It will have an ECR rate to offset the fees and interest earned on the excess balances. •Non-traditional - The other non-traditional hybrid option does not have an ECR, but the interest earned is first used to offset the fees then if there are any excess balances it will earn interest.
Commercial Interest Checking: •This product earns only an interest rate. The product does not have an ECR and has no option to offset the fees. This product is very similar to what was available only to sole proprietor/non-profit entities.
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New Hybrid Accounts – Top 25
Statistics based on all institutions in the top 25 by asset size (source: American Banker) that offer HYB - Best rate out of any ECR or HYB product at $100K - Rates as of March 2013 - Change Column reflects change in rates from April 2012 - March 2013:
• 64% of institutions surveyed offer both a commercial hybrid checking and a traditional analyzed ECR product
• 72% of institutions surveyed offer a commercial interest checking product
• 60% of institutions surveyed offer all three product options
The first hybrid product was introduced on 9/1/2011
The most recent new hybrid product was introduced on 3/5/2013
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AP
Y
Date
ECR Historic Data
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ECR and Hybrid Rates Comparison
Analyzed ECR Analyzed ECR
Only With Interest
(Hybrid)
Institution Tier Earnings Credit Rate ECR Change Earnings Credit Rate Hybrid Change
Bank A $100,000 0.45% 0.20%
Bank B $100,000 0.20% 0.20%
Bank C $100,000 0.20% (-0.10) 0.20%
Bank D $100,000 0.25% (-0.10) 0.20%
Bank E $100,000 0.20% (-0.05) 0.20%
Bank F $100,000 0.15% 0.20% (-0.05)
Average $100,000 0.24% (-0.04) 0.20% (-0.01)
*Methodology - Product with best rate @ $100K tier in HQ Market - Change Column reflects changes from April 2012 - March 2013
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Commercial Account Fees
Monthly Maintenance Deposit Ticket Deposited Item Paid Item
Analyzed ECR
Only
Analyzed ECR
& Interest
Analyzed ECR
Only
Analyzed ECR
& Interest
Analyzed ECR
Only
Analyzed ECR
& Interest
Analyzed ECR
Only
Analyzed ECR
& Interest
Bank A $22.00 $22.00 $0.80 $0.80 $0.20 $0.20 $0.20 $0.20
Bank B $20.00 $40.00 $1.00 $1.00 $0.15 $0.15 $0.19 $0.19
Bank C $20.00 $75.00 $1.40 $1.40 $0.13 $0.13 $0.20 $0.20
Bank D $22.00 $30.00 $0.80 $0.30 $0.20 $0.30 $0.20 $0.30
Bank E $20.00 $20.00 $0.75 $0.75 $0.15 $0.15 $0.20 $0.20
Bank F $23.00 $40.00 $1.00 $1.00 $0.18 $0.18 $0.22 $0.22
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Hybrid & Interest Only Accounts
ECR Only
Account Rate
Hybrid Account
ECR Rate
ECR Only
Account Monthly
Fee
Hybrid Account
Monthly Fee
Low 0.10% 0.10% $14.00 $16.00
Median 0.225% 0.20% $20.00 $23.00
High 0.45% 0.28% $27.00 $40.00
Average ($100K
Tier)
0.25% 0.1875% $21.10 $25.27
Statistics based on all institutions in the top 25 by asset size (source: American Banker) that offer HYB - Best rate out of any ECR or HYB product at $100K - Rates as of March 2013 - Change Column reflects change in rates from April 2012 - March 2013
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RDC Key Trends 2012-2013 Changes in Remote Deposit Pricing Structure
• Commercial: commercial remote deposit pricing is an essential cash management service
• Small Business: The number of financial institutions offering a separate small business RDC solution continues to grow
• Retail: Mobile RDC has become one of the most important and demanded retail products and has been the hottest buzz term in retail banking since the ATM
Changes in Remote Deposit Check Scanner Equipment
• Commercial: financial institutions continue to offer multiple check equipment options with payment and financing options and continue to provide for the bring your own device segment
• Small Business: bundled packages of RDC solutions including the check scanner equipment along with other cash management services
• Retail: remote deposit capture is an area of fast and exciting growth.
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The Future of Remote Capture
• The future of remote deposit is one that is changing as quickly as technology advances. The next generation of RDC is likely to be mobile based and segment specific.
• Technology enhancements with RDC now include:
• Account reconciliation capabilities
• Online systems integrations
• User limit controls
• Duplicate detection technology
• Remittance processing
• Mobile deposit
• Small business RDC has seen some of the most dramatic growth. Many institutions allow smaller businesses to use the retail mobile RDC as a deposit option.
• The future of remote deposit is mobile. With the aforementioned small business growth in standard RDC, the mobile option has become an expected addition and institutions will continue to develop segment-specific mobile RDC options.
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Commercial Product Packages Financial Institution Bank A Bank B Bank C
Package Name AccessManager Treasury E
CM Essentials
Monthly Fee $295.00/p.a. $100.00 $30.00
Fee Waivers None $50K Average Balance $40K Average Balance
Accounts Included Includes 5 Accounts and ZBAs
1 Master, 2 Beneficiary Accounts
Business or Preferred Checking
Account Transactions 1,000 Items Included 2,500 Items Included 250 Advantage 500 Preferred
Online Banking Online Manager Online Express $15.00 Month Prior Day
Online Direct Prior Day Included, $15.75 Intraday
Cash Services Not Included $100K Free $10K Advantage $25K Preferred
ACH ACH Payments Included $10.00 Month $0.35 Item $20.00 Month waived with $50K
Wires 10 Outgoing Wires $10.00 Month Wire Discounts
RDC Free Scanner $50.00 Month Not Included
Positive Pay Not Included $10.00 Month Included
Lockbox Not Included $225.00 Month Not Included
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Credit and Prepaid Card Trends
• Shift from Debit to Credit
• Payroll Cards
• Merchant Card Processing
• Pre-paid business cards
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Final Thoughts
• Conclusions
• Where are we now?
• What is going to happen?
• Product Recommendations
• Industry Focus
• Sophistication & Simplicity
• Projections for 2013 and beyond
• Rate Environment
• Fee Environment
• Questions
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Contact Information
Zoya Lieberman, CTP
Informa Research Services, Inc. [email protected]
Randy Rosen, CTP
Informa Research Services, Inc. [email protected]
Jim Graves
KeyBank