Banking is under pressure – fee caps limit revenues, low rates compress spreads and new regulations are driving up costs from everything from know your customer to back end process controls. In response, many banks are undertaking cost-cutting efforts. But will these efforts be more of the same – cut costs only to see the expenses flow back into the bank – or will they be truly transformational gains in efficiency?
Transaction Banking Viewpoints
May 21, 2013
May 10, 2013
Coming on the heels of JPMorgan’s acquisition of Bloomspot, JPMorgan and Visa recently announced a partnership that essentially claws out a closed-loop merchant services proposition, “Chase Merchant Services.” The structure for this arrangement looks similar to the AMEX model in that Chase merchant terminals will treat transactions initiated on JPMorgan-issued Visa cards in a differentiated and more flexible manner. The Justice Department antitrust settlement with the card associations may have been the first nail in the coffin for association operating rules.
Apr 26, 2013
One of the hot topics at the recent NACHA conference was the question of same-day ACH: should the US adopt a solution framework similar to “Faster Payments in the UK”? Under such a solution, banks would offer ACH credits (and possibly debits) that would settle on a same-day basis.
Dec 14, 2012
A technical move in the Senate has blocked consideration of Harry Reid's proposal to extend unlimited FDIC Insurance on non-interest bearing accounts. Senator Toomey noted the extension would require additional Federal funds and thus violate the Budget Control Act. A vote to waive this requirement failed to garner the required 60 votes.
Nov 19, 2012
The approach regulators take to governing financial institutions has changed. New rules require banks to be more precise about the scope of a line of business and the processes used to deliver the product set of that business.
Mar 24, 2012
We’ll take a break from deposit strategies to explore the world of virtual currencies – Facebook credits, Linden Dollars, World of War Gold. What are the implications of these virtual currencies for banks?Today, few banks are active in building the exploding virtual economy, yet the market value of Facebook and other virtual networks suggest that banks may be heedlessly ceding the revenue streams associated with the settlement, clearing and risk intermediation activities of this new economy.
Mar 09, 2012
In my last post, we reviewed possible interest rate scenarios and their impact on bank profits. In this post, we’ll outline some of the initiatives Treasury Strategies has been helping its clients deploy to address the opportunities and threats of a low-rate environment, detailing the first step of the approach – rigorous modeling.
In the face of a reduced value placed on commercial deposits, banks must take decisive action to sustain profit and position for growth.
Feb 24, 2012
The profitability of non-credit businesses – like cash management – relies heavily on deposit spread. Small business clients receive a wealth of operating services without fees by holding sufficient balances. Middle market and large corporates offset fees with balances, which earn short-term interest credit (ECR). In a normal rate environment, these compensation schemes are highly valuable to banks. They produce a stable core of relatively price insensitive deposits that are valued as a mix of short-term and long-term funding.