Current Treasury Pricing & Industry Trends Panel Discussion. Researching the Financial Services Industry Since 1983.

Transcription

1 Current Treasury Pricing & Industry Trends Panel Discussion Researching the Financial Services Industry Since 1983.

2 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 2

3 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. 3

4 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 4

5 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. 5

6 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 Change Column reflects change in rates from April 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 6

7 1/21/2004 5/21/2004 9/21/2004 1/21/2005 5/21/2005 9/21/2005 1/21/2006 5/21/2006 9/21/2006 1/21/2007 5/21/2007 9/21/2007 1/21/2008 5/21/2008 9/21/2008 1/21/2009 5/21/2009 9/21/2009 1/21/2010 5/21/2010 9/21/2010 1/21/2011 5/21/2011 9/21/2011 1/21/2012 5/21/2012 9/21/2012 1/21/2013 APY ECR Historic Data Date 7

8 ECR and Hybrid Rates Comparison Only With Interest (Hybrid) Institution Tier Earnings Credit Rate ECR Change Earnings Credit Rate Hybrid Change Bank A $100, % 0.20% Bank B $100, % 0.20% Bank C $100, % (-0.10) 0.20% Bank D $100, % (-0.10) 0.20% Bank E $100, % (-0.05) 0.20% Bank F $100, % 0.20% (-0.05) Average $100, % (-0.04) 0.20% (-0.01) *Methodology - Product with best $100K tier in HQ Market - Change Column reflects changes from April March

9 Commercial Account Fees Monthly Maintenance Deposit Ticket Deposited Item Paid Item Only & Interest Only & Interest Only & Interest Only & 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 9

10 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 Tier) ($100K 0.25% % $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 Change Column reflects change in rates from April March

11 RDC Key Trends 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. 11

12 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. 12

13 Commercial Product Packages Financial Institution Bank A Bank B Bank C Package Name AccessManager Treasury E CM Essentials Monthly Fee $295.00/p.a. $ $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 $ Month Not Included 13

14 Credit and Prepaid Card Trends Shift from Debit to Credit Payroll Cards Merchant Card Processing Pre-paid business cards 14

15 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 15

16 Contact Information Zoya Lieberman, CTP Informa Research Services, Inc. Randy Rosen, CTP Informa Research Services, Inc. Jim Graves KeyBank 16