# Now Is the Time for Banks to Introduce Intelligent Account Analysis Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-06-14 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Maximising Account Analysis Value in Rising Interest Rate Meta Description: Discover how banks can adapt to rising interest rates and maximise the value of account analysis for corporate customers in a changing financial landscape. URL: https://financedigest.com/now-is-the-time-for-banks-to-introduce-intelligent-account-analysishtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-12501534102-1736815645341-compressed.jpg) ![Dan Gill, Industry Principal – Banking & Financial Services](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/dan-gill-450x672-1736815645322-compressed.jpg) _By_ **_Dan Gill,_** _Industry Principal – Banking & Financial Services,_ [_SunTec_](https://www.suntecgroup.com/) The unprecedented events of the last several years have forced actions from central banks around the world. The Federal Reserve has increased short term rates with many predicting that they will have to rise even further to stem inflation. The [Bank of England](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") was recently forced to increase interest rates to 1% – its fourth successive increase and highest level since February 2009. This escalation will inevitably impact the [account analysis of banks](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?"), affecting the earnings credit rate (ECR) that’s calculated by banks to account for money they hold in non-interest bearing accounts. Consequently, it will lead many [banks to search for ways they can maximize the value of account](https://www.financedigest.com/new-legislation-makes-switching-bank-accounts-simples.html "New legislation makes switching bank accounts “simples”") analysis for their corporate customers. [Interest rates have been at record lows](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") sitting at almost zero for most of the past decade, so the traditional account analysis statement has been little more than a bill for services. However, as rates rise, the corporate [banking market](https://www.financedigest.com/in-a-rising-market-are-banking-outsourcers-pulling-their-weight.html "In a rising market, are banking outsourcers pulling their weight?") can and should revisit account analysis and maximize the opportunities it presents. **The [opportunity for intelligent account](https://www.financedigest.com/accountants-risk-missing-post-brexit-opportunities.html "Accountants risk missing post-Brexit opportunities") analysis** Just like the Great Depression led to the creation of Account Analysis, the 2008 financial crisis led to a situation that promised to turn it upside down. Dodd-Frank repealed the ban of hard [interest on demand deposit accounts](https://www.financedigest.com/uk-buyers-lead-interest-in-megacity-istanbul-accounting-for-21-51-of-all-property-enquiries.html "UK BUYERS LEAD INTEREST IN ‘MEGACITY’ ISTANBUL, ACCOUNTING FOR 21.51% OF ALL PROPERTY ENQUIRIES"), and it seemed that earnings credit might be destined for the history books. Almost simultaneously, the Federal Funds [rate dropped to near zero making both ECR and hard interest](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") less interesting. The Federal Reserve began paying [banks interest on their reserve balances and eventually](https://www.financedigest.com/asia-shares-bank-on-eventual-china-opening-oil-gains.html "Asia shares bank on eventual China opening; oil gains") dropped the reserve requirement to zero. Considered independently, these factors could have resulted in a new age of [bank fee](https://www.financedigest.com/20-billion-in-bank-service-fees-are-you-overpaying.html " Billion in Bank Service Fees: Are You Overpaying?") billing in the US. But together, they have led to a decade of stagnation in account analysis. When balances can only earn 15-20 basis points (BPS) in earnings credit, the account analysis statement is just another bill for services leaving corporate treasury [struggling and bankers unable to differentiate themselves in a commoditized product market](https://www.financedigest.com/analysis-ecb-seen-struggling-to-keep-market-on-side-after-mixed-messages.html "Analysis-ECB seen struggling to keep market on side after mixed messages"). As [rates rise](https://www.financedigest.com/russian-retail-sales-fall-deeper-jobless-rate-rises-in-sept-data.html "Russian retail sales fall deeper, jobless rate rises in Sept – data") at a record pace in 2022, the chase for yield will once again be a focus of corporate cash managers. Earnings credit will never be the best return on excess liquidity, but it can be a viable solution for [companies that need to maintain](https://www.financedigest.com/alone-together-how-to-maintain-a-positive-company-culture-while-working-remotely.html "Alone together: How to maintain a positive company culture while working remotely") readily available funds. Most [banks will simply return to their old playbook for offering earnings credit](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?"), but smart banks will understand that facing different challenges requires different solutions for corporate customers. However, to charge or not to charge is the question that [looms large over most commercial banking](https://www.financedigest.com/bank-of-england-set-to-hike-to-4-as-rate-peak-looms.html "Bank of England set to hike to 4% as rate peak looms") executives. Given that [customers today expect hyper-personalized services](https://www.financedigest.com/video-collaboration-is-pushing-the-boundaries-of-the-customer-experience-in-financial-services.html "Video Collaboration is pushing the boundaries of the customer experience in Financial Services"), transparency and high-speed on-demand services, billing automation becomes crucial to ensure customer satisfaction, profitability and stability. Commercial [banks need](https://www.financedigest.com/banks-need-to-become-a-lifestyle-brand.html "Banks need to become a lifestyle brand") a robust account analysis solution that gathers information from across disparate systems, captures every billing point and delivers comprehensive and accurate invoicing and statements to customers. An [automated account](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation") analysis solution also ensures streamlined processes, personalized pricing and engaging offers. **What an effective [account analysis solution](https://www.financedigest.com/exact-launches-practice-management-solution-to-help-transform-accountants-into-trusted-business-advisors.html "Exact launches Practice Management solution to help transform accountants into trusted business advisors") should look like** Banks must take a customer-centric view rather than a product-centric view to gain visibility into the totality of the [customer’s](https://www.financedigest.com/communicating-with-the-customer-is-the-future-of-mobile-banking.html "Communicating with the customer is the future of mobile banking") relationship with their bank. They should also develop earnings and [interest offerings that are a custom fit](https://www.financedigest.com/portugal-pm-welcomes-lufthansas-interest-in-tap-scholz-sees-good-fit.html "Portugal PM welcomes Lufthansa’s interest in TAP, Scholz sees good fit") to each customer, and offer options such as earnings credit only, hard interest only or a hybrid of both. They should also [seek to eliminate unnecessary reductions of earnings credit](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") from reserve reductions and maybe even consider other steps to raise capital. From a billing perspective, [banks could offer ECR and/or interest that’s pegged to a standard rate](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming"). They could also bring transparency to the fees and value that their corporate customers receive through intelligent statements, analytics and [open banking](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation"). Through the implementation of strategic deal management processes and systems that can shine on Request for Proposals (RFPs) and negotiations, banks can win and, crucially, retain [profitable business](https://www.financedigest.com/julius-baer-2022-profits-fall-as-it-hits-business-cycle-targets.html "Julius Baer 2022 profits fall as it hits business cycle targets"). [Banks must](https://www.financedigest.com/why-finance-professionals-must-bank-on-a-journey-to-the-cloud.html "Why finance professionals must bank on a journey to the cloud") also address their core systems and ensure their product catalogue, pricing and account analysis does not sit within their core ecosystem. While account analysis has existed for a long time, [banks have a significant new opportunity to apply technology](https://www.financedigest.com/the-rise-of-biometric-technology-in-banking.html "The rise of biometric technology in banking") innovations to implement a much broader solution for corporate customers. By addressing the provision of account analysis, they can create a solution that’s hyper personalized to the [needs of their customers and provides a relevant and engaging offer to businesses](https://www.financedigest.com/what-is-premises-liability-coverage-and-why-does-your-business-need-it.html "What is Premises Liability Coverage … and Why Does Your Business Need It?"). Ultimately, now is the [time to streamline the account analysis process and utilize technology](https://www.financedigest.com/why-its-time-to-centralise-public-sector-technology.html "Why it’s time to centralise public sector technology") advances to make it more customer-centric and cost effective. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---