Changes are coming to the banking industry in the form of unique pricing shifts that can benefit deposit customers willing to switch banks. We believe these changes could bring a seismic impact to the marketplace and offer regional bank providers unprecedented treasury management growth through their deposit centric customers.
As we continue to mine account analysis statements for the most recent trends, we are noting unprecedented price increases for over-the counter deposits, cash vault processing and/or virtual vault related transactions. A once coveted facet within the treasury management community, deposit and deposit related expenses, have now become a critical element penalizing select banker’s internal profitability model. You might recall hearing from your banker… “we can do your deal, but we need some deposits or treasury to get this done.”
Unfortunately, for the larger banks, it appears profitability challenges are on the horizon when handling cash via the banking center or various cash handling vehicles due to the expense of the “human element and time needed to process these expensive transactions”. In view of these trends, we continue to find that banks perceive the “valued business” to be one’s cash concentration business (post the deposit processing) or any and all disbursement related activity (checks, wires and ACH). For example, one recent bank analyzed saw over-the-counter deposit ticket expense moving from the sub $1 per deposit ticket level to a range of roughly $2.50-4.00. This type of increase is now opening up opportunities for regional bank players to vie for this business and gain significant market share.
The Regional Bank providers continue to have an elevated earnings credit rate (ECR) versus their larger peers and lower costs on deposits. The net of these two critical items results in lower costs for the end-user client. What is even more interesting, the levels of pricing are far lower than some larger/primary peers. While many clients will have to look at managing several “non-consolidated” deposit banks/partners/accounts… the incremental expense appears to offer a significant value proposition if one is willing to migrate. In fact, some clients are finding incremental dollars for an additional full time employee (FTE) and still yield double digit savings.
In conclusion, while bank change and migrations can be painful… 2016-17 could be the time to lower your depository expense. Consider Lost and Found as a strategic partner for bank bids and pricing evaluations. Let us review your account analysis today for free and share our recommendations for savings.