How do I benchmark and negotiate bank fees with large banks like Chase, and B of A based on the information or lack thereof I get from them?
Answers
The first part of getting to the point of successful bank fee negotiations is to get the account analysis data from the bank in an electronic format like the 822 or BSB so that it can be placed in a database in a similar format that will allow for comparison.
The next step is to review the services that you use at each bank and map them to AFP codes that achieve the best matches across all of the banks being used.
At that point, you can effectively compare the bank service pricing and usage against each other on a service by service or holistic basis.
With that base established, and effectively mapped AFP Codes, you can then also use one of the standardized tools to compare your banks to industry and regional benchmarks. The primary source I use for things like this is the Phoenix Hecht Bluebook of bank prices. AFP also publishes a pricing data set produced by Informa
Dan,
That is the first step, what next? I know you work with many clients who are armed with this information, how have they used it to lower bank fees?
Any other insights on specific items to "watch for" that are "low hangning fruit" that are charges that are often "not right" ?
Nice post to read on.Allow me to say something too.Few United States consumers trust their banks anymore, suggest studies. According to Bankrate, the clues are easy to see. The question “Do you trust your bank?” posed by banking consultants BAI & Finacle in their biannual Index of Bank Sentiment survey received negative replies from consumers. In the meantime, bankers polled showed signs of misconception, as they believed consumers trust them an excellent deal. I found this here: Consumers trust banks a great deal less than bankers think they do, personalmoneystore.com/moneyblog
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Looking at just the service fees (per the question): there are a lot of industries that have changed their fee structure that have had negative consequences.
Banks obviously are one. Many/most financial services companies (credit card, mortgages, leasing) as well as Airlines among others.
It's the hidden (or not so hidden) fees. Take a trip on your favorite airline and pay for a ticket, a seat, your luggage. You ever try to get on a plane these days without luggage??
What was initially a "deal" turns out to be quite expensive. My bank once charged me a fee for making too many deposits, now really. How much money did they make on the float and non-interest bearing checking account (not that interest paid is worth the effort to record).
Scott,
The bank can give you the fee analysis. They give you credit for the funds on deposit, then charge for activity in the account. Banks are often reluctant to do this, as they do not want to be challenged on the nature of the fees. In the past few years, I have found that Wells Fargo has the fewest fees - and very good service.
Ask until you get the answer that you need. A good cash manager needs to make the cash on hand work hard for the company.
We have found the best method to benchmark bank fees is to first follow the initial suggestion of acquiring your current account data analysis. This may be delivered in varying fashions depending upon the bank but the key is to get a list all of the services currently used, the fees charged (per transaction or otherwise) and volume of usage.
Share the list of services provided and volume with any competiors that you may have a serious interest in working with and ask them to bid on the business.
From there it becomes a negotiation process between you and your bank service providers to secure a 'fair' fee basis. We have been able to utilize this process to seek revised fee structures with a current bank or to move the business to a value added competitor.