ABA Banking Journal - July 2007 - (Page 32)
SMALL BUSINESS BANKING Good times roll again for Higher rates, low-cost technology, and remote deposit capture spur growth, especially among small and midsize players cash management A t $125 million in assets and with two locations, MainStreet Bank may be small in size, but it’s big in cash management. The Herndon, Va.,-based bank offers business customers such sophisticated services as automated escrow management, image-based lockbox, and remote deposit capture as well as more traditional cash management fare such as wire transfers and the ability to download banking transactions into accounting software. “In pure cash management, we could go head-to-head with anybody,” says president and CEO Jeff Dick. “We’re in the metro D.C. area and we need a cash management platform that will allow us to compete with the biggest and the best.” In addition to bringing in certified cash manager Michelle Parker as senior vice-president of commercial and treasury services, Dick’s team includes eight full-time sales people dedicated to selling cash management products and services. “They are out there every day trying to sell to business customers,” he explains. Does MainStreet Bank represent the new face of cash management: small, community banks aggressively offering robust cash management services typically found only in the largest of financial institutions? Could be. Although MainStreet Bank is perhaps one of only a few small institutions with such a large-scale cash management offering, cash management is increasingly important to community banks as well as regional and national players, says Charles Wendel of Financial Institutions Consulting, Ridgefield, Conn. “Cash management allows these banks to add significant value to the customer relationship and helps preclude a big bank from taking away their customers. Plus, cash management is a significant source of revenue and income,” says Wendel. By Lisa Valentine, contributing editor The past few years have not been easy for banks offering cash management, as they struggled with decreasing revenues due to low interest rates. But that slump may be over. According to the annual Ernst & Young Cash Management Services Survey, banks are entering a period of increasing cash management revenues. The largest banks in the survey achieved the most revenue growth in cash management: a 3.5% increase in 2005. Although smaller banks did not fare quite as well, with a 2% increase, these numbers sure beat the 1% revenue decline smaller banks suffered in 2004. “Cash management is now top of mind,” says Gary Kasik, president of Commercial Treasury Solutions at Metavante, Milwaukee. “Banks’ desire for fee income is driving cash management.” The top three money-making products in the Ernst & Young survey are purchasing cards (14% revenue increase); automated clearing house and electronic data interchange services (8.5% increase); and wire transfer (7.5% increase). “I see a renewed interest in cash management from banks of all sizes in the last 18 months,” adds Jacob Jegher, senior analyst at Boston-based research firm Celent. “A lot of banks will be focused on replacing or investing in their existing cash management technology infrastructure,” he says. 32 JULY 2007/ABA BANKING JOURNAL www.ababj.com/subscribe.html
Table of Contents for the Digital Edition of ABA Banking Journal - July 2007
Beware “Patent Trolls”
Snapshot: Asset Quality
Sleight of Mind
Debit Rewards Require Different Approach
High Rate Checking a Hit
ABA Chairman’s Position
Raising College Interest Rates
Service Key to Bank's Direct Lending
Still In the Payments Game?
Cash Management Moves Down Market
Mashups May Transform IT as Usual
Dawn of SOBA
Case in Point: Bank of the West Bullish on Workforce Optimization
Should You "PLug In" Your Board of Directors?
To Advertise/Index of Advertisers
ABA Banking Journal - July 2007
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