Banks can learn much from how other industries do things. In the pricing and billing of services, airlines and telecoms companies are offering banks a model that they should learn from.
Anyone who has bought a plane ticket online or has a contract mobile phone can typically see exactly what they’re being charged for when they make the purchase and what exactly they’re being billed for each month in their electronic statement or by checking their online account.
Such capability needs to be replicated for banks’ corporate customers too. “I’ve always said we, as an industry, need to price like an airline and bill like a telco,” says one senior transaction banker.
Banks do provide their clients with an adequate level of transparency and accuracy on all the fees they charge, but not enough and corporate treasurers are crying out for an electronic service that would greatly enhance their visibility and understanding of this key operational cost.
Over 60% of some 28,000 treasury professionals who responded to Euromoney’s 2014 cash management survey said they want to see the universal use of a common electronic bank billing format, a reporting service that would better enable treasury teams to compare and analyze each and every fee or charge levied by their core relationship banks.
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Most large global banks have for years provided their US multinational corporate clients with such a service, but outside the US and particularly in Europe and Asia, the provision of such granular and comparative electronic bank billing is far less prevalent. And this needs to change.
Having no single electronic standard for the exchange of such billing information agreed and applied unilaterally by banks and their clients all over the world is one reason why this hasn’t taken off outside the US.
The lack of technological ability of some banks to regularly provide such information and companies’ lack of the technology and operational expertise to receive and use it in the way that they want, are others.
These reasons may have prevented electronic bank billing from taking off globally thus far but they shouldn’t be an impediment over the long term so long as banks and their clients work together to make it happen. At a time when banks are trying to better meet the needs of their clients, this shouldn’t be a problem.