Commercial banks have anywhere from 350 to 700 active treasury management service codes, but according to Curinos’ Treasury Management Fee Analyzer, only 20% of them deliver more than 90% of the fees. The remaining 80%—an average of ~400 service codes—account for a mere 9% of total gross fees (see charts).
Average Number of Active Treasury Management Service Codes
Average Gross Fee Concentration
by Service Code Quintile
Source(s): Curinos TM Fee Analyzer, US Bank TM Data
There are two primary reasons service codes have proliferated: duplication from legacy acquisition and regional price lists; and custom services or billing arrangements that end up being used by fewer than 1% of active clients.
Having hundreds of service codes makes benchmarking pricing and understanding broader market trends more difficult. Rationalizing the pricing structure is prohibitively costly and complex at most banks. On the other hand, simply understanding that most bank TM billing structures are very top heavy can yield actionable and valuable insights that are immediate.
That’s why banks should focus on these top services that move the needle when making pricing decisions based on competitive position. For the revenue management team running an annual pricing event, they’re likely to be the top one hundred services in the portfolio. For the sales team involved in competitive bidding, they’re the five to ten codes that will drive maximum client value and ultimately win the relationship.
Focus is key. The deeper competitive benchmarks go into the services that produce low fees, the less likely the benchmark will have any impact or is even fully valid. Such a service could become so specialized or part of a different, broader pricing approach that it fails to yield a true like-for-like comparison.
The upshot? Less is generally more. Commercial banks need to focus on the relatively small universe of service codes that will have the greatest impact and reveal the most reliable benchmarking comparisons.
