Treasury Management Products Offer Untapped Opportunity

This was one of the key takeaways from a recent virtual workshop held by the UFS banking community.

Treasury management products and services represent untapped opportunity for community banks to expand business relationships, enhance their critical role in unlocking the potential of their communities, and provide expanded non-interest fee revenue.

That was among several vital takeaways from a four-and-a-half-hour interactive webinar and workshop hosted in April 2021 by UFS Tech, the Grafton, Wis.-based technology outfitter for community banks. Presenter Marci Malzahn, an expert on cash management and treasury management solutions and services, as well as owner of Malzahn Strategic — a community bank management consulting firm in Maple Grove, Minn. — led 90 attending bankers of the UFS community with a deeper understanding of how treasury management tools can align with their business goals and benefit their customers.

Additionally, Malzahn shared ideas for integrating more treasury management services into banks’ offerings and provided sales and marketing strategies to ensure successful implementation.

“Treasury management products are the glue for your customers, providing non-interest fee income that banks need to maximize. These products also allow you to become trusted advisors and consultative experts in financial services for your business clients,” Malzahn told attendees, who participated in multiple online breakout discussions, interactive polls, and networking opportunities. Attendees also received valuable document templates, and actively engaged with Malzahn and UFS treasury experts.

What follows are summaries of five treasury management topics that Malzahn facilitated at length with members of the UFS community.

Why You Should Offer Treasury Management Products and Services

Banks and their employees can reap benefits by implementing a series of treasury management products and services. Those benefits include:

  • Becoming an “advisor” rather than simply a “transactor,” and a well-rounded “banker” rather than a “lender.” These products are great reasons to regularly engage with local businesses while enhancing employee’s knowledge of their business clients and deepen relationships with key business leaders.
  • Creating cross-selling opportunities. This can be accomplished, at least in part, by leveraging the use of account analysis statements to better understand your customers and sell the value of those services, whether or not you decide to hard charge.
  • Generating new non-interest fee income, determined by and based on the industries in which business clients are involved, and the level of national bank competition in your market.
  • Establishing a competitive advantage over other banks in the community.

Effectively Marketing Treasury Management Products and Services

Effective treasury management involves successfully marketing and selling products and services to new and existing customers. Here are five of Malzahn’s suggestions to help sell and spread the word:

  • Encourage teamwork: An institution’s business banker and the treasury management specialist should meet with prospective clients together to ensure seamless integration of products and services.
  • Provide needs assessments for clients: Get to know prospects using an assessment template (provided to attendees, courtesy of Malzahn) that explores the company’s industry, customers, suppliers, balances, transactions, business operations, and more.
  • Package cash management services: While any business can benefit from such services as positive pay and merchant credit cards, specialized industries may require specialized services. Retailers that provide refunds and warranty payments, for example, might be interested in digital disbursements, while law firms and construction companies could benefit from escrow accounts and zero balance accounts.
  • Offer customized proposals: This will allow the bank to provide the exact services a client needs, placing that customer at the “right level of services” from the start while also leaving open the possibility of additional cash management opportunities.
  • Promote your services: Incorporate your treasury management options into branding and marketing materials, and advertise for such enhanced services as positive pay or same-day ACH.

Treasury Management Products and Services Available

Malzahn shared details about various treasury management products and services. Here is a sampling of the most popular:

  • Cash Management Reporting through business-specific digital and mobile solutions.
  • ACH Origination, in which banks can be at the center of payroll, risk management, and cash management.
  • Merchant credit card processing, in which banks partner with a merchant credit card processing vendor and offer the merchant’s services to their business clients. 
  • Positive pay, in which businesses upload a list of checks issued, and the bank matches them to cleared items. This service can be automated or manual.
  • Remote deposit capture, allowing businesses to create and send check images to banks for deposit, thereby helping banks increase productivity for their clients.

Treasury Management Products and Services Evolving

Malzahn shared details about various emerging treasury management products that will help take bankers to the next level of service. Here is a sampling:

  • Digital payments and mobile wallet services, including Apple Pay, Google Pay, and Zelle. They provide for more secure transactions by not capturing personal information or requiring a signature or a card swipe.
  • Cryptocurrency settlement and custody solutions, and network access using Blockchain technology to transfer funds from one party to another securely.
  • Evolving solutions to mitigate fraud

Risks Involved with Treasury Management

Offering new treasury management and cash management products and services comes with increased risks — whether they be strategic, financial, legal, operational or technological. Compounding those risks is the fact that each one has the potential to adversely impact a bank’s reputation. Malzahn provided webinar attendees with several tips about how to navigate such risks, including the following:

  • Designate a point person. Each institution should have someone who monitors and conducts risk assessments.
  • Be aware of which products and services require risk assessments. They include mobile banking, remote deposit, and wire transfers.
  • Don’t be deterred by risks. Technologies already exist (with more on the way) to help protect banks and their clients against fraud, identity theft, and other risks associated with cryptocurrency and other emerging products and services.

Developing a Treasury Management Strategy

Malzahn wrapped up the interactive webinar by recommending attendees follow six “next steps” to implement and enhance the treasury management and cash management products and services they offer. The process begins with simply identifying which ones to make available, and then it builds in complexity with each successive step.

Malzahn encouraged and responded to questions from the UFS community throughout the webinar, while also promising to send all attendees several related bonus documents for them to use at their own banks.

In the end, she reiterated her initial assertion that attendees should stop waiving fees for treasury management and cash management services. Instead, they should follow her guidelines for creating a non-interest fee generation strategy that works for their particular institution and its clients.

This workshop, one of several planned for 2021, was the latest in a series of webinars/seminars UFS offers to help employees of community banks make technology work for them — rather than the other way around.

UFS is a WBA Silver Associate Member.

By, Alex Paniagua