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Maximizing Treasury Management Fee Revenue In 2023 (And Beyond)

This Month In Commercial Banking

In 2022 banks staged their most significant repricing event in years for treasury management fees, with 30% of banks telling Curinos they planned to raise total fees by 5% or more. But because the event generated total lift below core inflation levels, there is more work to be done in 2023. 

Banks rode a wave of rising interest income in 2022, but a potential Fed Funds plateau and increasing competition for deposits means banks may be approaching peak NIM. And that will be front of mind for bank managers and investors as they turn their focus to non-interest revenue in 2023.  

The good news is that because treasury management fee repricing has trailed inflation, there is ample room for another big pricing event in 2023. Indeed, many banks have implemented their 2023 price increases or will do so soon. The bad news is that doing so will require more precision than in previous years.  

During 2022, we observed two major themes: an increase in competition for core payments business, especially among regional banks, and significant investments in tools and process to optimize TM fee pricing. (See Figure 1.) 

Figure 1:
Current and planned tools used in a pricing event

Source: Curinos CDA ​

Looking ahead to 2023, we see these themes:  

  1. Another big year of pricing events, with many banks playing catch-up. The uptick in industry ECRs, which we anticipate will continue in 2023, will add a layer of complexity.
  2. Continued emphasis on primary relationships, cross-sell to existing customers and total-relationship pricing. 
  3. Increased adoption of emerging payments rails, including faster payments and Zelle for business, that will shift payments economics.  
  4. Simplification of the business-banking offering through enhanced bundled products.  

Keys to success include analytics on the current portfolio, competitive market intelligence and a compelling product lineup. Most important will be increased coordination across digital and personal channels as well as bank lines of business and product areas. 

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