Banks that are moving away from being transactional have recently been promoting more bundled accounts. For example, banks on their game actively market a high-net-worth elite checking product to the principals of their commercial accounts and commercial account packages to their high net worth business owners. This tactic can dramatically increase both new account growth and lifetime value.
Tag: Cash Management
Early this week we highlighted some of the basics when selling treasury management services (HERE). We highlighted the importance of teamwork, getting the specialist in early and we provided banks with a sample timeline in order to set a best practice standard for speed of customized delivery.
If you ever wondered about the future of banking, we can tell you it lies directly in the path of treasury management. Loans will continue to be commoditized, other bank services will be cannibalized by non-banks (payments, etc.) but the treasury management platform will serve to differentiate banks. Every business needs some sort of treasury management banking function and with the rise of technology, banks will start to differentiate themselves by creating different platforms.
Cash is going away. It is going away faster than anyone thinks and will stick around just longer than checks (and all other paper items), but that is not too distant in the future. Checks will eventually go away because it is the will of the people. Cash, on the other hand, will be relegated to history because banks will stop being the enablers and hasten its demise quicker by charging for the service of dealing with cash. Cash has about another five years of glory and a total of about ten years of useful life.
The war of corporate banking is being fought over cash management. Unfortunately, many community banks are at a disadvantage because they're under-armed. Most of the deficiency stems from strategy as it is rare we hear of a bank where building out their cash management offerings is a priority. That is a mistake, as dollar-for-dollar expanding your corporate cash management suite is one of the best investments you can make given its high return.
Given the rise in digital payments, one thing that makes less sense for consumers is having them carry both a credit card and a debit card. For banks, the situation is equally absurd, since both cards not only increase issuing and maintenance cost, but making debit more convenient would not only increase interchange revenue, but reduce check processing costs as well and help with overdraft compliance.
As loan growth picks up at banks, we see more attention turning to gathering low cost, high duration deposits. One of the best ways to do this is through grabbing the operating account at businesses. One of the best ways to get the operating account is to offer an online, low cost set of payroll services. This is why the offering of online payroll services is picking up for community banks.