Troubleshooting Bank Fees

Hélène Shen

Hélène Shen

Managing Director - Global Head of Treasury Optimization
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Hélène Shen is the Managing Director - Global Head of Treasury Optimization at Redbridge Debt & Treasury Advisory. She has Masters in Business Administration Concentrating on Banking, Corporate, Finance, and Securities Law.

Session Summary:

Takeaway 1 :
Why bank services need to be reviewed?
Key Points
  • Statistics show that almost 99 times, people feel overwhelmed to track different bank services monthly and get missed out reviewing the services.
  • There is no linear correlation between the number of bank services used and the size of the company or organization.
  • For a better understanding of bank fees, focusing on the service utilization review method gives a clear view of how efficient and inefficient the treasury team is in an organization.
Takeaway 2 :
What are five different groups of services that usually raise red flags and cause troubleshooting?
Key Points
  • Inconsistent services are made out of habit, legacies, etc but should never be set up in the first place.
  • Reductant services are similar services that are being paid for multiple times.
  • Inefficient services should not be in use anymore.
  • Inefficient users still use certain bank services in the wrong way out of forced habit that ends up in non-utilization of the services.
  • Punitive Fees are the punishment that bank imposes on the clients on the usage of unfavorable services.
Takeaway 3 :
What are the best practices to overcome the challenges associated with reviewing bank services?
Key Points
  • Standardize as much as possible to suit of services and create group policy and every single opened account should follow the same suite of services.
  • Educate the team to make sure that everybody understands how to use bank services and the cost of the actions.
  • Streamline everything by only allowing exceptions on the case by case basis.
  • Repeat bank service review at least once a year and try making it a recurring exercise.
Helene Shen:

Thank you very much. And thank you for trying so hard to pronounce my name.
Yeah, so I am Helene, and don’t worry if you can pronounce my name, you can use my Starbucks name, which is Joe
and I am the managing director for Redbridge Treasury advisory side of the house. Before we get into our topic du jour, which is troubleshooting bank fees. I just wanted to give everyone maybe a brief introduction of who we are at Redbridge. What we do so you can also have better insight into the data, the information I’m about to share and know exactly where it’s coming from. So Redbridge is a leading Treasury and advisory firm. We are located globally.
And we mostly service you know, treasurers and CFOs of extremely large multinational companies. This is really our core clientele. There’s about 100 of us, across the globe. Our headquarter are actually founded and still headquartered in my beloved hometown of Paris, in France.
But we started extending our geographic footprint about 10 years ago to the Americas. And we accelerated actually the move about six years ago, when I relocated myself from Paris to New York, we are now about 50-50 in terms of, you know, revenue, headcount across the two sides of the pond, which really shows how important the North American market has become to us. Over the life of you know, 20 years of existence, we’ve delivered over 500 engagements. We have expertise in 100 plus countries with a very strong specialization are two core markets and those are the North American markets of course in the European market. As I said in introduction, most of our clients are usually from what I would call global fortune 500 so they’re large multinationals with very complex structures and spread across multiple countries, continents, etc.
A little bit more about Redbridge, you know, product offering, what is it exactly that we do?
Redbridge is historically an advising company. We’re a consulting company. This is our DNA. It has been our visual that since day one, and we’re split into two main expertise, which are debt advisory on one side and Treasury advisory, which is the side of the house that I oversee Treasury advisories primarily focused on everything and anything that touches the life of any treasurer, basically. So we’re very focused on payments and collections, whether on the bankside or on the merchant side. So from the acquisitions perspective, of course, cash pooling and liquidity. And then Treasury organizations, system processes, you know, all your TMS and fun stuff. That’s enough about Redbridge, I think, you know, let’s dive in into the agenda for today. And before really tackling the issue of troubleshooting bank fees, I wanted to start by addressing one form of anxiety that I do see among all of my clients, whenever I pronounce the word bank fees, or even worse account analysis statement, I usually see people you know, shaking rolling their eyes, and you know, all sorts of, oh my god, don’t talk to me about bank fees and account statements, because I have no idea how to figure out exactly what’s going on in there. And so let’s just take a moment to understand why do people feel so overwhelmed when we’re talking about account analysis statements, I think the first reaction that I have is the client is lost and like too many different formats, I don’t know where to retrieve those statements, I don’t know where to go. Once I retrieve them, they all look different. The language that the banks were using are different. And this makes the statements very difficult, virtually impossible to compare across banks. So that’s the first, initial reaction that I get. Of course, a second reaction is okay, I’ve retrieved those statements. There are so many line items in there so many services, I just can’t figure out exactly what’s going on. If you add all those different, you know, sayings, different, you know, areas of concern, you get to a situation where most of my clients will say even if I’m able to retrieve those statements and figure out what’s going on. I really don’t have any power of negotiation against my bank because I don’t have enough knowledge. I don’t
Have any expertise into what those bank fees are exactly. And most importantly, I, myself Treasurer of company, ABC, and living in my little black box, and I’d really don’t have any point of comparison, any benchmark that I can use to really understand whether or not I’m doing things right and whether or not my banks are pricing the services, right.
And so to all the people who have felt this, or who will feel this, I wanted to say, first, you are not alone. This is the case with 99% of my clients. And I just wanted to give you these little points of data here or average client uses 250 different line items per bank, that is 250 different services per bank that you need to keep track of, on a monthly basis. So how can anyone not feel overwhelmed when you’re having to track that amount of data across all of those banks? And I think the really interesting thing about these statistics is you’re going to say okay, but at Redbridge, most of your clients are very large corporations. Those are the, you know, the big multinationals of the world. Of course, they’re going to have Charmin insert 200 and something services and dozens of bags. But they also have an army of people to keep track of that. Well, first of all, No, they don’t. But the most interesting thing is, yes, those are very large companies. But they are absolutely no linear correlation between the number of services using and the size of your company. Because if you’re looking at mid-sized companies, even smaller size companies, they are still using on average 100 different services, right? It’s not like you can get away with a dozen services with your banks, the moment you open an account in the United States, you are going to have about 50 to 75 different services just to get things working.
So the consequence of that is 90% of my clients, whenever I started engagement have never ever reviewed they bring services, never had the discussion with the bank never had the talk with the bank about what’s going on, help me figure out what I’m paying for, and help me figure out if I’m paying the right price.
So I know this is a lot to digest, and a lot of questions and a lot of concerns I’m throwing at you. And of course in our short session today, I won’t be able to answer all of them. But I thought that maybe an interesting exercise we could do today is just to focus on one little step that you can all take in your journey to better understand your bank fees, right. And this little step is what we call internally in our internal lingos service utilization review. So what is service utilization review, it’s basically putting all of the services that you’re using with your bags under a microscope and try to figure out exactly what are you’re paying for it. And if you are actually using those services, but across a very, you know, organized methodology organized process, because I think most of the time is really you know, the data that’s overwhelming, if you do have a method, if you do have a process, things get easier. And so I think today, what I want to do is to focus on that method. service utilization is an extremely powerful tool, not only to get your house in order, but also because most of the time, what I find out is service by doing service utilization, you really get this mirror into the organization of your company, because you see everything you see what people are using, what services they’re using, and those are actually reflecting what type of processes you have implemented, what are the things are actually working? And what are the things that are not working so well. So it is really like almost spying a little bit into your organization. But it gives you a very good idea of how efficient or inefficient your Treasury team actually is. And of course, it’s a great way to become what I call a treasury superhero. Because you know, who wants to do that, really, and who knows how to do that , very little people I have known, this is my personal experience, very little corporate practitioners are actually able to go into this exercise without failing. So of course, I want you guys to succeed. So what I’m going to do today is present to you a one on one, methodology of how to approach service utilization, right? So I’m trying to make this very simple and very basic, so it’s not too scary. And hopefully, when you leave this conference today and go back to your office or home office tomorrow, you actually take the first step towards this journey. And so the way we’re approaching service utilization, we tried to bucket it into five different groups of services.

That I personally consider should raise a red flag in your mind’s, right, and we’ll go through each of them. And I’m going to try to give you a few examples and pointers for each of them. The first one is what I call inconsistent services. an inconsistent service is basically a service that you never should have set up in the first place. The best example that I can find of that is what one of the best is actually, you know, look at how many control disbursement accounts you have. And then look at how many checks those accounts are actually cutting. And I’m willing to bet that some of your control disbursement accounts actually never cut any checks. So why do you even have this account set up as the control disbursement account, if it’s not cutting any checks, you might close the account, just open a regular account, you don’t need it. This is the best example of inconsistent service. And probably somebody just set up that account that this way out of habit out of legacy, for whatever reason, but it’s time to change. The second one is what I call redundant services. So this one is pretty self-explanatory, but most of the time, they’re hiding in plain sight in plain sight. So redundant service is, you know, paying for the same service multiple times. And one of the examples that I have is, some of you, most of you, I’m sure, are set up on receiving previous day statements, right. And what I observed among my clients is a lot of them actually have the service set up, but through three different channels. So they might be retrieving it on the web portal, they might also have it received through BAI file, and they might sometimes also have the bank, push them as an email. Why do you need to receive that same information, so three different channels and pay for those three separate channels every time, this is a perfect example of a redundant service. Next one is inefficient service. So inefficient service is kind of my favorite. It’s just a service that you should not be using. And so what really most of the time, surprises me is the number of CD ROMs, and fax and paper statements that I still see, when I look at my client account analysis thing was all everyone is smiling. I wish you could see my laptop from a closer range, but it doesn’t even have a CD ROM reader. So I’m really wondering who, in 2021 is still using CD ROMs, I think a good rule of thumb is if you have children, and they’re teenagers, if they don’t know what it is, don’t use it. Go Green is 2021, you’ll be fine was just electronic format, you don’t need CD ROMs, you don’t need paper statements just get rid of really the low hanging fruit.

Next up is what I call inefficient users. And so this really gets into a little bit more of complexity in this exercise. An inefficient user is not necessarily somebody within your organization that whose income is incompetent and inefficient user is somebody who maybe by force of habit is using certain bank services the wrong way. And so one of the examples that I’d like to share is a few years back, we were working for this client and then we noticed through their account analysis statement that they had an insane amount of current-day report volume like somebody was downloading those and pulling out those current day’s statements, you know, over and over and over again every day, every single day. And that was driving a crazy, crazy volume and then the crazy charge every month. And then we realize actually the person behind it was a treasury analyst whose job was to actually follow and tag certain high-value payments and the only way they know to do it was to actually download your everyday statements every 30 minutes until the wire had hit the account and they knew it was there. So obviously there’s a much more efficient way to do this you can just have notifications pushed to you by your bags and save a lot of money.
Of course, the Treasury analyst had no idea that every time they were doing this, it was actually driving the cost of the company and every time they were actually pulling those reports the company was being dinged
last one is the punitive fees. And so punitive fees are you know, a consequence of the fact that the banking industry in the US have made all those account analysis statements so complex so granular, banks are actually trying to punish their clients when they’re they’re using a service that they’re really not, you know, in favor of. So one of the example is for example, if you have a lot of wires, a lot of electronic payments going out and you do see a very high amount of repairs.
Then this is your cue that you should be doing something different, that something is broken in your process, and the bank is actually punishing you for this.
So this concludes really easy, little, you know, pointers and tips that I had for you best practice going forward.
In summary is first standardize as much as you can your suite of service, create Group Policy, you know, every single account that you open should follow the same suite of service, no more, no less. Second one is really to educate your team and make sure that everybody understand how to use bank services and the cost that’s associated to their actions. Third one is, of course, to streamline everything and really only allow exceptions on a case-by-case basis. And, of course, the last one is repeat that exercise because everything that I showed you so far is really, you know, house cleaning your mate, you’re trying to get your house in order. Once it’s in order, you need to make sure that you maintain it clean, and you need to make sure that you go through this exercise on a regular basis.
And I think this is the end for today.
Sorry, I went a little over time, but I think we still have a few minutes for questions.

You’re more than perfect with time. So we do have a few minutes. I’ll take it.

Audience Member:

Hi, this was a great presentation, by the way. Question, have you so it all makes sense when you’re dealing with a traditional catcall it cash management bank with the 250 lines of statements and various
detail level broken out. When you go into the trust world, when you go into the depository trustee type of relationships, oftentimes your bank fee will be, you know, sort of charging you one lump sum on their annual or quarterly basis. And there will be a few additional services for wires and whatnot. So there’s not a lot of detail. And those fees are hefty. For us in our kind of a bank fee analysis. The depository bank fees are 10 20 times more than the cash management fees. Have you had any luck working with? You know, with those types of banking institutions? And trying to get more out of that?


Yes, that’s a very good question. And actually, what you were experiencing in this particular area is actually what the rest of the world experience on their cash management fees, right? When you go outside of the US, for example, most countries outside the US and Canada are dealing with less than a dozen of different services. Right? So, the opportunity for doing a service utilization on the dozens of servers actually doesn’t make sense, right? This is where you actually want to negotiate with your banks. This is when you want to sit down with your banks, and really look at the services, look at the volume that you have associated with a service and have a hard conversation with them as to you know, why am I paying this fee? Is it reasonable? Is it in line with what the market is paying for it? What I strongly suggest when you don’t have that much insight into benchmarking your fees, is already tried to benchmark internally, right? You have multiple bags, delivering the same service, try to put them in in competition, try to look exactly you know, what am I paying at Bank A versus bank B? And that’s already a good start. But yes, to your point, the fewer number of items you have on your account analysis statement, the fewer opportunity you have to do service utilization review, and you have to go to the next step, which is negotiate with your banks.

Audience Member:

Yeah, there’s not much in terms of account analysis statements to begin with from the bank. It’s literally you let’s say you’re paying them $20,000 a year for it’s bundled. Yeah, it so it’s part of the depository agreement. So the positive agreement is typically given to one of the lenders who wants to perform certain functions. And we do benchmarking and we have internal pricing, and we sort of developed our own reasonable estimate, but it’s only based on how much they charge and the other banks charge. So there was still no data out there that I was able to get my hands on.


Yes, I’m going to advertise for my company here but we have all the data in the world so come to us.
But jokes aside Yes, it is most of it’s very difficult for a client to have insight into benchmarking because you know, they can benchmark internally you know, Bank A versus bank B internally but you have no idea what their peers outside in the market or pay for this particular service. And this is where I truly saying you know, I’m trying to stay objective, I truly see a consultant can help because what we do day in day out is negotiate on behalf of our clients. So one of the most precious assets that we have in the company beyond our consultants, of course, is our database and is like all the price points that we’ve collected.
Throughout the years doing negotiations on behalf of our clients with different banks.

Any additional questions? Yeah.

Audience Member:

for clients that aren’t keeping track of volumes, either through a team, so how do you recommend they reconcile what actually occurred? versus what the bank is charging them for? Like, how do they make certain that the bank isn’t making? I know banks never make mistakes? But yeah, sure, they get the statement saying, you know, you did X number of wires, and here’s the charges. What are the different methods for if you suspect the volumes might actually be divergent from what they’re charging you for? Do they have a way to reconcile that either through a TMS? Do you guys offer a tool or a service to do that? Or is that just not an area where there’s a lot of variance?


No. So it’s a tough question, because
the limit of the exercise is you rely there’s a trust relationship between you and the bank, right? So I’m guessing he was a joke when you said the banks never make mistakes.
They do make mistakes. The problem is, when they’re making a mistake on the prize, it’s easy to track, because you have the historical prize, you can compare a month by month, when they make a mistake on the volume, it’s much more difficult because, you know, business fluctuates.
What we do with you know, Hawkeye, the software that we have is, we basically have like a standard deviation type of methodology, but on steroids, so we’re going to be tracking the volumes of every single service. And the clients can set up what their standard deviation should be, you know, you could be a Nazi about it and say it Oh, as long as I see a fluctuation of plus or minus two, every month, I want to be I want it to be flagged and you can be more like I, you know, my business is going to fluctuate plus or minus 100. And so you can really see that but yes, there is a very scary foundation of all that, which is the account analysis statements and the fact that we will never be able to tell exactly when the banks is sending you and say, you actually this month used 1200 wires, we’ll never be able to tell if really, you issued 1200 wires unless you have state of the art and the most accurate TMS that’s actually reconciling internally with the number of wires that you actually dispersing? I have never seen that type of client. It’s, yeah,

Audience Member:

got it. And then one follow on question. without naming any names. Do you see significant variance in the charges for the same services between the major US cash management banks? Or is it pretty standard?


Nothing is standard, it is absolutely not standard, I have worked with very large company receiving moms and pop shops pricing, I mean, really, it was outrageous. I’ve also worked with smaller companies that were more savvy or know we’re negotiating on a regular basis and actually were able to get very good pricing. So there isn’t really you know when it comes to how the banks are pricing their clients, I really feel like it’s, you know, based on whether or not they’re like you based on whether or not you’re giving them additional business, etc, etc. Now to the question, do I see differences across banks? Not really, but I would say that when you look at tier one banks in the US, so you know, the JP Morgan, the Wells Fargo of the world, they all have preferences, they all have different appetites. So you know, Wells Fargo is, for example, a bag that is very proud of, you know, by remaining this brick and mortar bank and still being focused on depository when all the major banks was just like running away from depository. You Citibank, for example, is is a bank who is barely you know, has a very smaller footprint. And so depository lockboxes, not something they’re going to invest on, but everything electronic, they do have appetite for that. And so you do see through the pricing that they offer their clients, you do see patterns, you do see strategy, you do see where they have appetite and where they’re trying to like, you know, get out of a particular market or a particular type of service.

Makes sense? Thank you. Sure.
Any additional questions? Yes.

Audience Member:

How frequently do you recommend that clients or companies do the service review once in lifetime or once they pick a bank or once every year or once you general recommendation?


so I’m going to return that question to you and say, How often do you spring clean your house? Right? And I think everybody is going to have a different answer. Some people will do the spring cleaning every year some people like me will do it like every Paul and some people will do it once in a lifetime, right? So it is the exact same like there’s it is exactly like cleaning your house. Not saying you know, we don’t all have the luxury of Mary Kondo our bank fees every year, that’s never going to happen. That’s also why people like me, companies like me exists. So we can take that load off of your, plate. But I think a good rule of thumb would be, you know, at least once a year, try to go through that through this exercise. And why once a year, because you know, coming January, usually you’re are having all those price increase coming from the banks, right? The supposedly inflation the banks will come and raise their price say, most of the time, you’re not even notified. And you actually, you know, see it three months later by actually trying to look at your statements and realize the price I’ve increased since January. So what I suggest is really go through this exercise at the end of each year, and anticipate that with the banks before January, before you get hit with the increase, have the conversation with your banks about how to maintain that increase to a, you know, reasonable level, and how to get rid of all the services that you’re not using.

All right, thank you. Any other additional questions?
All right. Thank you so much, Helene Shen.

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