Bank Fee Management Webinar Series: ECR and Fee Optimization

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Advise - Major Projects
Assist - Outsourced Services
Research - Market Data
Inform - Industry Insights
Advise - Major Projects
Assist - Outsourced Services
Research - Market Data
Inform - Industry Insights

Dates / Times

Tuesday, March 21, 2023
11:00 AM – 11:30 AM EDT

Wednesday, March 22, 2023
2:00 PM – 2:30 PM EDT


This is an online event


Jason Campbell, Strategic Treasurer
Craig Jeffery, Strategic Treasurer

Hosted By

Strategic Treasurer Logo

Companies are well-served by understanding the competitive position of interest rates, ECR, and bank fees in times of stability. It is far more urgent in times of rapid change and high volatility that treasury groups monitor this activity more closely and secure competitive rates quickly.

As the steward of good bank management, today’s treasurer wants to feel confident that the team is optimizing bank relationships, including fee structure. Being armed with data allows you to have a reasonable discussion with your banker about the overall compensation you are providing them. Any relationship with your bank includes a number of crucial factors, and not just fees alone. Key factors include the level of credit extended; advice and guidance provided; services and service level delivered; commitment to the relationship; fees, rates, and overall compensation.

Strategic Treasurer’s series on bank fee management will educate the profession on the following:

  • Fair transparent market pricing and data for reasonable discussions with your banks.
  • Tracking ECR to make good investment/budget decisions.
    • How has ECR been changing generally and with the rates paid to banks?
    • How delayed ECR movements or shifts are, if at all?
  • Optimizing your service lineup for efficiency and controls.
  • Reducing fees by eliminating unnecessary services.
  • Ensuring fee spend matches banking priorities (share of wallet).

If you encounter any issues with this webinar replay, please contact our team.


Announcer  00:28

Well, welcome everyone to today’s webinar on ECR and fee optimization, the first in a series of webinars on Bank Fee Management. This is Brian from Strategic Treasurer, and we’re pleased you could join us as we consider bank relationships, ECR and bank fees in the current environment. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you would like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you would like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation, and we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. It will also be a few polling questions throughout today’s webinar, where you’ll be able to select your response from a list of multiple choices, you will need to click the submit button on the polling questions to have your response recorded. And last, please ensure that your resume display name includes both your first and last name, so we’ll know to whom we should send the credits. Our speakers for today are Jason Campbell, business development leader at Strategic Treasurer. And Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. Welcome Jason and Craig. And I’ll now turn the presentation over to you.


Jason Campbell  02:03

Awesome, thank you so much, Brian, appreciate it. Welcome, everybody. Thank you so much for spending some time with us today, it’s great to kind of see the little chat box with where everybody’s from LA to see some some New York with a lot of representation of New York. So in Michigan, Pittsburgh, North Carolina, awesome, great representation across the country here. So we really do appreciate taking the time today to talk a little bit more about being Fee Management, particularly around ECR fee optimization throughout today’s presentation, what our agenda will kind of look like today is we’ll talk about bank relationships and what to expect with when you’re working with your, your local banks, or your big you’re big, big banks, whenever banks you’re working with, we’re gonna talk a little bit more into fair market pricing, some applications, then go through some examining some various rates and kind of some trends and things that have been going on. And then we’ll kind of close it out here is talking about some practical implications, and how to move forward and what are some next steps to take to kind of ensure that you have a strong working relationship with your banks. So we’ll go to the first slide here, talking about your bank relationships and what corporate should expect. Now, I guess, you know, it’s looking at today’s world and the banking and what’s been going on with, unfortunately, with Silicon Valley Bank, Signature Bank, Credit Suisse, just to name a couple, probably good time now to kind of revisit, you know, how are you with your banks currently, you know, what’s that current state look like? It’s kind of like a health check as you will like, if you go to the doctor, you know, let’s get, you know, check your vitals, check, you know, do some tests, make sure everything is running on all cylinders, probably no different right now to have that good checkup with your bank, because it’s time to probably revisit or even potentially reassess those relationships. So things that you probably want to expect and what you want out of your banks, the access to capital and credit, even those strong ties to ensure that funding is available for your business operations is critical, right? Gotta have a business, gotta have money, gotta have access to credit when you need it, those things are going to be important. And you want to make sure that those relationships that you have with that relationship manager, whoever your representative with the bank is to ensure that you have exactly what it is that your needs for current state or potentially even down the line, those quality of services. Are you paying for the right? Services? You know, whether you’re on a contract? Or maybe you’re not on a contract with your bank, but are those level services what you really need? Is it what’s going to get you to your end objectives, your goals? Does it fit your current structure? You know, those are just questions that you want to kind of look at and as you dive into what your current state is that strong relationship management, a bond and picture like a strong relationship management just like any other relationship in life, it’s got to be a two way street. Right? Does that individual who’s working for you understanding your needs how often do you meet with your your bank, your bank relationship manager do you make with them monthly court Only semi annually does do we need to change the frequency? Is it perfect? You know, those types of things to kind of just think about, you know, are you being able to maximize? Is there anything else that that relationship could get better? Right? Do they engage proactively? Not necessarily, you always have to reach out to them, but for them to kind of check in and say, Hi, how things are going, you know, what can we do for you, you know, just want to, you know, just say, Hello, those things are going to be important, because it kind of moves into that great customer service. And I know that all of us on this call, you know, no matter what we do in life, not just in banking, but just in general, we always want to be treated as the most important person. And that’s where that good customer service is going to play a huge part into that relationship, you know, not just being friendly, right? But accessibility, you know, can you access what you need from that person and the time in which you want to, because it’s always important to you, and you got to make sure that person also reciprocate that level of urgency and importance, and ensuring that they’re there to meet your needs, both not just through good times, but also to and you know, whether there’s changes that are happening, or even through bad times that you have somebody there that you can always rely on. Having that fair, transparent market pricing? That’s a big thing. With many of us, throughout the industry, you know, how are we, you know, are we paying a fair price for our services? You know, we’re customers. And so we always want to make sure, right, we want the best deals, but you know, is it everything that we’re looking for? Are we getting, you know, relationships, access to credit, quality services, all those things are key and vital, but are we paying a competitive price across the board. And lastly, here is having somebody who’s going to act as an advisor, right, your best interest at heart, you know, looking out for, you know, changes of tools and services that are available, you know, are they reaching out to help you ensure that you’re achieving your financial objectives. And those things are going to be key and crucial as you look at from a banking relationship. Now, next slide, as we move into fair market pricing, and talking about the realities, right, the lack of visibility, visibility, and what it impacts. So as we think about earnings, credit ratings, and bank fee optimization, you know, fed rates have changed, we know that it changed several times last year, we’ve already seen a change this year, and there’s probably going to be some more changes on the horizon. T bills have changed. So really looking at as when’s the last time you kind of checked out and say, hey, where am I at currently? You know, do I have access to even find out how I can’t even look at, you know, am I paying a competitive price, you know, is, you know, whether it’s DCR interest rates? You know, are there better options available, that I maybe need to search out? When we think about local and international accounts? You know, when’s the last time you revisited the bank structure in your organization? You know, how does your business grown through acquisitions? Wizard downsizing? You know, many people have come and gone through throughout organizations, you know, his last name has been revisited to ensure that, you know, people are, you know, where they need to be as far as who’s who can access account information, or even from a structure perspective, analytics and reporting, how fast do you want to see cash? Right? It’s all about the speed. Right? And as we think about in today’s world, it’s how quickly and how fast? Can you get it to me? Well, are you getting that type of support? Are you able to see those cash, those reporting, at the time in which you want to review them? You know, how do you feel about, you know, the level of visibility, is the technology there for you? You know, those are just some key questions to ask as you start to think about, Am I missing something? And then lastly, the use of appropriate services? Are you being charged fairly? You know, are you under contract? If you are under contract? Again? Are those services? Are you paying for the right price of those services? And you know, somebody monitoring that is somebody looking at comparing to saying what I’m actually spending versus what I should be spending. It doesn’t make sense as it is it might be charged overcharged for services that I should not be paying for. And those are things that just from not having that visibility to you can have some true financial impacts, which is going to lead us into our first poll question. So I think I think the overall our game here is we want to get about 100 people participating in this in our polling questions here. And we normally we wouldn’t release the poll questions with answers, but if we can get 100 people to type in in the chat box, ECR, we will release the polling questions and the answers and response so let’s get 100 people in the chat box there to light it up with ECR. Looking pretty good. Alright, so the first question we want to ask is we want to talk about ECR from is pleased to answer this multiple choice. We formally track or ECR rate against external rates, whether it’s the other earnings, credit rates, or the short term rates compare between our banks, or we just don’t track. And then the second piece of this polling question is we had the following practices in place. And please, again, we’ll read them all, but multiple choice, just like the answers that are appropriate for your situation. Craig, it looks like we got a lot of people lining it up to ECR.


Craig Jeffery  10:32

We do. I think you’ve picked a pretty low number, but that’s because you’re nice. I would have said 150 or 200. But that’s, that’s great. You know, you were talking about some of that. Information, I think, you know, what’s important in relationships, right feet fees are component. The access to capital, the ideas is, is there’s an aspect of how frequently are they getting together with you, but how are they bringing value and information to the to the organization that is, is valuable? There’s also a question there about providing feedback on a particular bank fee analysis software. So that since that’s product specific, we won’t answer that great question. Thanks for that. But we won’t answer specific questions on on products. They’re looking at the responses. Jason, it’s like, we formally track our ACR against the other earnings credit rates, we compare between our banks 26% 46%, about a quarter track with other rates and 30% don’t track. So that’s a that’s a pretty interesting indication. And we’re assuming because the session is titled ECR, we might have people who are a little more in tune to ECR. So this is a survey of those that are those that are attending the webinar, which which might be more intensive there, but but still, you can see the population of you know, what’s what’s occurring, who tracks different items. Pretty interesting. I think it’s my view that the percentage of companies that don’t track is quite a bit higher than 30%. And way higher normally, but with interest rates, tripping up, we’ve certainly seen a lot of our customers add that functionality there. That Jason, when it says we had the following practices in place, about one in six do share while reporting this is if we talk about a comprehensive view of relationships with the bank, how are we rewarding them, right, just like banks, look at companies, they do risk adjusted return on capital, we look at that longevity, the relationship, how open the company is to them. So they’re looking at companies like that. And that’s pretty, that’s a pretty significant percentage of banks that look at companies that way. Yeah, one and six have some type of formal share of wallet reporting. calls with bankers are documented and available. So two out of nine are documented calls, making those call notes available. Now, if you look at if you look at the bankers, whether it’s a treasury service officer, or banker, they have targets for how many calls they make, and they have to document those those are tracked by systems. So corporations here are quite a bit far farther behind. But still, that’s, that’s certainly up from where we’ve seen it in years past. So this documentation, and then the high watermark is bank fees are evaluated and benchmarked, at least every couple of years. So about half of you do that. And that’s really important to do, because prices are changing, especially with increased inflation, shift the shift of services on the, you know, that are more paper based more manual, which tend to have increasing costs to digital, which tend to have a longer trajectory, a gradual decrease, especially as volume scales, tearing your banks having a relationship policy that may require some type of tearing about 16% or 15%. Have a formal bank relationship policy, that formal bank relationship policy is really, really important for any moderate to large organization. And it’s important that the organization understand that so there’s a there’s a lot of room room to grow there on the formal relationship policy. So and 21%. Don’t have any of that. So I could see why everybody type the word ECR. So they get those results, just to see where everyone stacks up. All right. Well, thanks for taking the poll question and great job on asking people to put ECR in there, Jason, we’ve already surpassed the 100. So well done. Let’s look at let’s look at a few rates. So don’t throw up in a gang signs. So that’s the ECR gang sign, I guess. Right. So what are some rates if we look at the average ECR rate you See that showing up appearing here in the screen, the average DCR is the blue, you can see it’s tripped up to a little over 1% in December, that’s average, there’s a huge range of what organizations are receiving, and what banks are paying for their earnings credit. But if you look back at the beginning of 2022, you can see that this composite rate, this composite rate is a rate we track we track a basket of rates and monitored over time. But you can see that basket of rates has moved up over 4%, through the course of 2022 is sitting just below the average ACR right now, it’s quite a bit higher than the average. When you look at the gaps of in the range of ECRH, you’ll be interested to learn to see how wide and how broad that is. But this is what’s occurred, you know, as inflation rose, the central banks like the Fed, for example, rose there there costs for borrowing to tamp down inflation. But that is certainly increased rates of interest that are being paid. So you can see that shift, if you look at just some specific different rates and different instruments like T bills, Fed funds, money market funds, picking different information, you can see that that general trajectory, which tends to track the basket of investments that we have, you can see that moving up right around the 4% to the end of 2022. And as you know, or most of you will know, as we moved into 2023, there’s already one fed fund bump of 25 basis points, expectations flow between 25 and 50 basis points for the one that’s going to be coming out very, very soon. So we expect to see that we probably should ask a question. What do you think the basis point yield will be on the next fed fund bump? So maybe, maybe we could fit that in but but we’ll see. Those are some interest rates. Looking at the Fed Funds, specifically, the blue and the goldenrod are the represent the ranges the upper and lower range based upon the Fed Funds indication, and what’s happened through the year. So we went from this transitory inflation expectation at the end of 2021, and it was anything but transitory. And the Fed moved a little bit slower, started making adjustments in March bumped it up 25 basis points, you can see the the blue shaded area, they’ve increased it. What was it seven times in 2022, including three consecutive 75 basis point jumps at the end of the year, they only bumped it up half a half a percent 50 basis points at the end. So but you can see the the overall shift in the Fed Funds rates largely driven to push down and damp and inflation which had accelerated and remain quite high. So there you go. There’s the Fed funds rate. There’s some questions about when’s the next Fed funds rate hike? I can’t remember if that’s today, or tomorrow, I think it’s, I’m pretty sure it’s this week, but we have someone typed that in the box. And it said a or 322. So we had a couple. A couple different items. We can just Yeah, tomorrow, so it’s coming up super, super soon. So I don’t know always on Wednesdays. This is great. Thanks, Holly near Baltes who’s fed it into the chat. What happens with fees paid and earnings credit rate. So a couple things I want to point out on here. Look at the look at the range. This is we’re showing some correlation here correlation on the left side of estimated annual fees paid, you can see that in the box less than 250,000 a year. So a little look like just over $21,000 or less a month, quarter of 1,000,002 million and more than a million. And that’s just one way of correlating fees that are paid. You can correlate them based upon balances that are kept and a few other areas. So we capture a lot of that information. But this one, we’re just showing annual fees pay the next column and the final column first quartile, third quartile. first quartile is 25% off the bottom is the first quartile 25% Off the top is the third quartile. So those interest rates the high and the low for each of those categories represents the middle 50%. The meeting is the meeting of everything but here we’re just taking we’re carving off a quarter on each end and showing you the quartile. So a little over a percent difference from the first and the third quartile. And while your credit quality, the amount of services you use, the capital markets activity that you do, there’s a whole host of things that drive value in a relationship and what you pay for fees what you pay for services, the amount of Are you get from the conversations, and the input that they provide is also, there’s also a factor here that may not be monitored as much the ECR rate. And you can see anywhere from 1% to, you know, over 1.4% difference, just in that middle 50%. So if we go from the first quartile, third quartile, we’re seeing a spread of more than a percent. So it’s certainly not an efficient measure of who’s, who’s getting what rate. And if you go out to the ends, the rates go all the way from zero to sometimes over 4% in the fourth quarter. So depends on a number of factors. But you can see how that differs to the more your fees are there’s a correlation with a higher ECR rate that’s paid. And quite a extensive amount of variability between the low the high and the middle numbers. So certainly worth keeping your eye on where you are and what what others are receiving. Because you want to pay within a range. That makes sense, and but there’s certainly other other results that you can achieve. If you don’t ask for it, you might not get it. So I’ll go from there, Jason to the next one. So yeah, there’s some there’s some good questions in the box. But this an even better questions are in the poll questions that we have here. And we can see the first question says counterparty risk management changed in the past two months. Jason brought up a number of challenging situations with concerns about particular banks, and some of those being absorbed or protected by central banks are forced merger in the case of Credit Suisse. And UBS, has counterparty risk management changed in the past few months and your organization significantly were in other words that significantly but and you’re not just more worried, but you’re you’re doing additional steps you’re making taking additional steps like tracking counterparties with more data points and reports, maybe you’re adding credit default swaps as an addition to like tracking a one p one, you’re doing something else with that maybe credit health scores, more attention is being paid to it, maybe not specific actions, but people are asking about more about the same as before. I don’t know, we didn’t put any less. I didn’t think we wanted to hear in a bit. Click the word no, we’re doing less, that wouldn’t be responsible on the other. The second one is please indicate any key areas you’d like to see covered in another webinar. So we’re doing a series on bank relationships, count management, Fee Management, what are the topics that you’d like to see, you can select all that you’d like it’s a rounded square, you can select all that you’d like counterparty risk management, bank relationship management share of wallet, which is how you divide up your spoils that you reward here, banks will offer you credit ideas, relationship content over time, a bank relationship policy, what’s necessary for that? How do we run that cost management, across different fees, fees from cash management services, custody services, Card Services, or other topics that you want, but maybe are not listed on our chart? Okay. All right. So 69%, about 70% are paying more, or paying more attention to it or doing more activities. Yeah, only only 17% are doing more activities. 16%, it’s been about the same. And that can be certainly appropriate. If you’ve, if you have a good risk management approach. The I don’t know could be based on where people are. But, you know, just interesting to see that there’s a, you know, the 16 and 17% set on other sides of we’re doing significantly more. And about the same, those are the two hurdles. And, you know, it’s definitely weighted towards more attention if you draw the curve, more attention at half, significantly more at 17. So definitely a significant shift. And we all knew that there’d be more, but now you know, the magnitude of that shift. The last area Jason is please indicate any carriers you’d like to see covered in another webinar. Bank relationship management, okay. And counterparty risk management, they all the other ones are really, really pretty close. Up 30 33% 20% and cost management. So I think we have we have other ideas there. JASON So we know I get cover.


Jason Campbell  24:43

Yeah, no, this is great, especially as we do the continuing the series and stuff and really being able to put some great content together that what people are interested in. So thank you guys for sharing that bit of information with us really do appreciate it.


Craig Jeffery  24:55

Yeah, sounds good. I’ll turn it back over to you for you know, why does why does this matter? We do just covered a lot of information, why does it matter?


Jason Campbell  25:03

Yeah, you know, that’s that’s a good point. That’s why we’re here. Why does this all matter? Right? So as we think about that, that practical relevance, being equipped with data allows you to have a reasonable discussion with your banker about your ACR, and the overall compensation you’re providing them. Remember, you’re the customer, right? So you want to make sure again, you know, those guys are on the same playing field, same mindset, same understanding, and being a good steward of your organization, you want to ensure that you’re optimizing or maximizing that pure value. So those key factors and bank relationships, you know, what are some things that you’re trying to also get out of it is that level of credit extended, where you need it to be having that relationship, we all know it matters. And being able to have access to it is so important in times when you’re really going to need it, that advice and guidance, having that true advocate that’s going to help pull you down that path of your financial objectives, what you’re trying to get out of that baking relationship and ensuring you have that person that’s going to give you the right information, resources to be able to make the best decisions for your organization, the services, and that service level, that you’re wanting that level of customer service, ensuring that it’s been delivered the commitment to the relationship, remember, it’s a two way street. And so it just like any other relationship, to get at two components, working together with the same common goal, with the same objectives, same path, having that blueprint put out, all those things are going to be important. And then overall, those fees, rates and overall compensation, ensuring that again, paying that true fair market price. So moving on to you know, what are the next steps, you know, so what can you do? So, as we think about where you were, you know, banking management as a whole ECRs and P optimization? Where is it out in your in your prior to your priority list? Is it is it near the top is it in the middle, or hey, it keeps moving positions. And those things are important. You know, when you think of like, you know, lack of staff or maybe a lack of experience, or even expertise into this field, there are avenues that you could seek out, there’s organizations like strategic treasure that you can lean on for assistance and help you through understanding what you’re trying to achieve. But you know, even locally, as you think about understanding your total spent, you know, as last time that you know, anybody or maybe yourself, have you really kind of took a deep dive into looking at your baking spent, is it appropriate? Is it fair market, you know, all the things that we talked about having that granular benchmark performed, the different methodologies that are available to ensure that you’re truly optimizing that compensation piece of it, and ensuring your bank fee management isn’t, you know, complexity of services use manual versus automated. And when we think about automated, think about all the technology changes, everything, every day, there’s a new form of FinTech that’s out there that may be more beneficial for your situation to help you achieve that true optimized optimized level that you’re looking for. And as well as even solution changes, different product platforms that are available that may be again, maybe better in your benefit in the long run. But other statistical dimensions use that affect pricing. You look at the risk adjusted return on capital CAC, calculus, kept talk calculation there, I finally get spit it out. So risk adjusted, return on capital calculation, read credit rating, industry size, and share of wallet. So all those things that go into factored in to ensure that you are maximizing pure value, where it makes sense for you in your organization. So Brian, that’s all I have, Craig, and do you have anything else to add?


Craig Jeffery  28:44

Just one thing, you know, we should have asked a survey a poll question about how many people create their own RAROC or a estimated RAROC for for their banking relationships. We’ll save that for another time. Thanks for for that.  Back to you, Brian.


Announcer  29:01

Well, thank you, Craig. Thank you, Jason. And thank you, everyone for joining us today. The CTP credits, today’s webinar slides, and a recording of today’s webinar will be sent to you within five business days. And be sure to register for the next webinar in this series on bank account management and structures by clicking the link in the chat box. Thank you and we hope you have a good rest of the day.

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