As bank fee statements slowly standardize, corporates and banks can work together to make the analysis process simpler.
Analyzing bank fees to uncover outliers remains a thorn in the side of treasury teams—in no small part because the banks code their fees and transmit the files to corporates in many different ways. And while standardization is improving, companies should keep the pressure on banks to bring more clarity to the opaque world of bank fees.
- That was among the takeaways at a recent NeuGroup meeting of assistant treasurers who were joined by Larry Williamson, head of healthcare, corporate and investment banking at Societe Generale and Tonette Palencia, a cash management sales manager at the bank.
Forcing the issue. “It’s perfectly appropriate to guide banks in the right direction,” Mr. Williamson said. “In the context of selecting service providers, I would be highlighting that a key criteria and consideration is for banks to provide their billing information in the forms that work for you and in line with more of a universal standard.”
- He added, “If I’m a corporate client, I’d be saying ‘We want our billing to look like this, are you able to do that?’”
- Ms. Palencia cited the example of a client that requested the corresponding service codes to the products on their billing statement as part of their analysis to evaluate and compare their banking fees.
State of play. As it stands, many reports from banks in the US come in what’s called EDI 822 statements, an e-billing file standard that one member described as “pretty raw.” The member said companies “have to have special programs to ingest it, or some pretty sharp programmers to decode it.”
- Ms. Palencia said that many banks base these statements on AFP service codes, but some might classify products differently from others, so it is “a lot to reconcile, and it takes a bit more on [a company’s] side to analyze it more in-depth.”
Hope in BSB reporting? Bank Service Billing (BSB), including the Twist and ISO 20022 standards (camt.086), offer more standardization globally, since EDI 822 is used only in the US.
- “At some point, you want to get to a common utility, and Twist may be a part of that, with one single electronic database providing inputs from banks instantly,” Mr. Williamson said.
- One member said some of the international banks he works with use the Twist format, which “is almost like an XML format, it’s a little more standard.” The member said Twist files still need to be run through a software tool “to make heads or tails,” though it can be as simple as analysis in Microsoft Excel.
- Twist is based on AFP’s service codes but has closer to 800 options, which offers a measure of simplicity.
- SocGen is working on a project to roll out BSB files more broadly. “Because we’re a European bank, that’s where most of our availability is,” Ms. Palencia said. “But a lot of the banks have also rolled it out.”
Third-party solutions. Members spoke highly of solutions from Redbridge and Fiserv, which can make the analysis process simpler but whose costs need to be evaluated in the context of how much savings they bring.
- One member that uses Weiland BRMedge from Fiserv said the system is effective in tracking “pops” in fees. “We rely on it to find anomalies, and we go back to the banks to get those fees reduced,” he said. “It’s been helpful, but it takes a lot of time and effort to maintain and get up and running.”
- Another member, after researching the market for a few months, has a contract to implement Redbridge’s HawkeyeBSB later this year. “We’re expecting to be able to see 60% to 70% of our bank fees globally,” he said. “It does almost all the work with all the statements, and we just take a look at the analysis.”
- Mr. Williamson expressed surprise that corporates need these tools to navigate around bank billing systems. “In this world of digitization, we’ve still got banks thinking of requiring corporate clients to work around the inefficiencies of billing, which surprises me,” he said.