In this interview, Lucie Kunesova, Associate Director – Cash Management Consulting at Redbridge, discusses the findings of an initial survey of European and US banks by Redbridge that aimed to find out their capabilities in terms of reporting on banking fees and the interest they pay on excess cash balances.
Why did you conduct the survey?
The decision stemmed from our work renegotiating banking fees and services. More specifically, we had noticed how difficult it can be for our corporate clients to obtain detailed information from their banks about the level of interest paid on excess cash balances.
Most banks have made significant progress in reporting cash management fees in recent years, with many European institutions having caught up with their American counterparts in this area. The kind of information companies need to accurately monitor their banking fees is now widely available. What’s more, tools such as our HawkeyeBSB platform enable treasurers to manage their banking relationships better by providing a detailed view of cash management service usage by entity, bank and country.
By contrast, conducting a detailed audit of the interest generated from excess cash balances remains a major challenge. At the local level, these kinds of reports are not always provided. Few banks are capable of supplying central treasury teams with a consolidated document covering multiple regions. Even within the same banking group, the formats of interest income reports can differ, as can the channels through which they are transmitted.
Knowing exactly what banks are able to provide in terms of both cash management fee reporting and interest income reporting across different countries enables us to provide better support to our clients. It provides an objective basis to help us determine which banks should be invited to take part in a request for proposal process in a specific region – for example, following an acquisition in a country where the company previously had no operations.
Reporting is a fundamental pillar of the relationship between banks and their corporate clients because it ensures transparency. Reports should be easily accessible, without the company having to request them. While this may seem obvious, this is not always how things are in practice.
What was the scope of the study, and how did you decide which banks to survey?
We contacted a panel of 27 European and US banks with which we regularly work as part of our cash management consulting assignments. We sent our request for information questionnaire to domestic French banks and to institutions offering international and multi-country service coverage. Our team is in regular contact with all of the banks we surveyed about developments in their cash management offerings and our clients’ feedback on the quality of the service they provide.
It’s also important to note that the survey complements the work carried out by our Data team, which gathers information on banking capabilities, particularly regarding electronic fee statements, on an ongoing basis.
What questions did you ask?
The request for information focused on two areas: cash management fee statements and interest income reporting.
For the first area, the objective was to align the responses we received in the survey with the data our Client Care team already processes daily on behalf of the users of our HawkeyeBSB platform. We focused on the formats used in electronic fee statements (EDI, TWIST and CAMT.086), the costs involved in setting up reporting, and the cost of sending files. We asked the banks how long it takes to set up the reporting, the steps involved in the process and the availability of dedicated support teams. We also asked them whether they are able to provide historical data on cash management fees.
Regarding interest income reporting, we asked in which countries the bank could provide reporting, in which format (generally PDF), at what frequency, and through which channel (email, banking portal or host-to-host connection). Most importantly, we asked whether the bank was able to produce a consolidated multi-country report.
Only 11 out of 27 banks responded. Did that surprise you?
Yes, especially since we contacted institutions that know Redbridge well and that we are in regular contact with, both bilaterally and as part of institutional frameworks such as CGI-Swift working groups. US banks proved more willing to participate than those from Europe.
We would like to thank all the teams that recognized the mutual benefit of taking part in this initiative about transparency. We will be carrying out similar surveys in the future, and hope that a higher proportion of banks will respond.
What were the main conclusions you reached from the responses you received?
The survey enabled us to refine our mapping of the countries in which each bank can provide electronic bank fee statements. Unsurprisingly, this mapping closely reflects each institution’s regional footprint. The findings suggest that electronic fee statements are now widely available in the US, Europe and Asia, and most banks that responded do not charge fees for implementing this service. However, implementation timelines vary significantly: some institutions commit to one week, others a month, while others were more vague, stating that timelines that “depend on the scope and countries involved”.
Regarding interest income reporting, with the exception of a major US banking group planning to roll out consolidated reporting this year, capabilities in this field remain limited. It’s clear that banks need to do more if they are to enable treasurers to easily monitor interest income at a centralized level. As of today, only monthly account-level reports are generally available.
The CAMT.086 format is often mentioned in discussions about banking fees. To what extent has it been adopted so far, particularly by French banks?
We ask banks about their ability to provide fee statements in CAMT.086 format in all the cash management RFPs we conduct. Their responses make it clear that take-up is gradually increasing among French banks.
What does this study reveal about the overall state of the bank-corporate relationship?
It shows that the relationships between banks and corporates are not yet as transparent as we might have hoped, although the situation is steadily improving – it has become easier for companies to obtain basic information about their banking fees and services in recent years. But while the market is moving in the right direction, there is still a long way to go.
Redbridge will continue its investigations into these important topics. We plan to revisit these questions with banks as part of our ongoing discussions with them and will emphasize the importance of making this information available to all treasury professionals. In fact, we will be publishing an update on our blog very soon. I hope to be able to present more comprehensive responses that will enable us to provide a more complete picture of the state of banking reporting, accompanied by some informative infographics.