Going into 2023, participants in Curinos’ Commercial Analyzer reported increasing their digital investments – more than half of them by 10% – which reflects a multi-year focus on upgrading the commercial digital experience. But these investments appear not to have had a direct impact on treasury management (TM) fee growth. With the exception of a pandemic-induced boost, growth in fees since 2020 has been underwhelming, averaging only 3% in the past two years (see chart).
Digital investments simply aren’t materially reshaping the products banks are introducing to their clients, as indicated by flat AFP families used and an addition, on average, of only one new service code. Part of the issue is that much of the investment is going into non-revenue generating capabilities, such as digital channel upgrades and self-service account opening. At the same time, new products being introduced, like real-time payments (RTP) and virtual account management (VAM), have the potential to replace higher-revenue options like wires. While adoption of these thus far has remained low, we may see further erosion in TM fee revenue as it increases.
Bottom line: In an increasingly complex and competitive environment, the path to increased fees that can justify the wave of investment will require strategic focus, product and pricing discipline and tight alignment with front-line client teams.
Except during the pandemic, TM fee growth has been underwhelming.
YoY TM Fee Growth: Q4 ‘20 to Q4 ‘23
Avg. TM Client Profile: Feb. 2022 to Feb. 2024
Source: Curinos Commercial Analyzer and TM Fee Analyzer
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