After a scary couple of years when even large companies clung to their bankers, it's a new game these days. Loyalty is going out the window as companies look for ways to cut costs, and many corporate treasuries are going with whichever banks offer them the best service and the lowest fees.
According to the latest Blue Book of Bank Prices, just published by Phoenix-Hecht, listed bank service fees rose an average of just 2.2% in 2010, less than the 2009 consumer price index increase of 2.7%. That marks a big change from 2009, when listed bank fees jumped 3.6% even though CPI was close to zero in 2008. The 2010 result represents a return to normal, because over the last two decades prior to the recession, bank fee increases usually stuck close to the previous year's CPI increase.
The Phoenix-Hecht report also highlights another phenomenon: a return to aggressive bargaining by corporate treasuries, aimed at knocking down those listed fees. The study surveyed 800 companies and looked at the pricing of 88 bank services.
Fee discounting reached record levels over the past year, with 45% of companies reporting discounts in pricing from list, and with discounts averaging nearly 40%.The most frequently discounted services were positive checks paid (69%), controlled disbursement checks paid (67%), account maintenance (66%), controlled disbursement maintenance (65%) and credit posting (65%). The biggest discounts were negotiated for check image retrieval (60% median discount), deposit reconciliation item (58%), ACH debit block-filter maintenance (56%), return item redeposit (56%) and ACH return item (54%).
Paul La Rock, a principal at consultancy Treasury Strategies, says that as large companies become more confident about their access to credit, they are focused on "looking for efficiencies and cutting fees to vendors, including the banks." A number of companies are also finding that the wave of bank mergers in the past few years in many cases has led to reductions in service, he says.
"During the credit crisis, people were afraid to change banks," says La Rock, "But what we're seeing now is that if treasurers experience poor service from their bank or can't get reductions in fees, they're gone.
"We're seeing many more companies now going out with RFPs for their banking services," he adds.