treasury's big data: how to transform analysis statements

Treasury's Big Data: How to Transform

Analysis Statements Into Analytics

Denise SneddenAmerican National Insurance Co.

Bridget MeyerRedbridge Analytics

Michele BartkowskiAmerican National Insurance Co.

American National Insurance CompanyAmerican National is a family of companies that offer a broad portfolio of products and services, which include life

insurance, annuities, property and casualty insurance, health insurance, credit insurance and pension products. The

American National companies operate in all 50 states.

$28.4 billion in assets (GAAP basis 6/30/19)

$3.3 billion in total revenue (GAAP basis 12/31/18)

27 legal entities

4 banks

$2.3 million annual gross fees

American National Situation

• Interested at first in only getting a bank fee analysis

software

• Had not done an RFP with banks in more than 10 years

• Treasury department was split into 3 locations but

consolidating functions revealed major differences in how

each department managed banks and fees

American National’s Wish List

1. Find a partner to focus on a bank fee project vs allocating internal resources and

performing the task in bits and pieces

2. Find a partner to help collect and measure the total costs of cash management

operations, especially when that information is found only on paper/pdf

statements

3. Perform “Arms Length” due diligence and evaluate all banking partners fairly

4. Identify primary drivers for cost and inconsistencies across banks and products

5. Implement a consistent monthly process with an easy to use software to monitor

fees AND volumes

6. Educate the entire team

American National Today

1. Advisory firm was selected to

manage the project

2. Software provider selected and

implemented

3. Launched an RFP with all existing

banks and one new one

4. Analyzing the results

What American National Learned - Surprising

Results

1. Different contracts with the same vendor

2. Volume and cost of checks was different than what was originally believed

internally

3. The level of difficulty to distinguish certain costs

4. Determining the cost to receive and make payments through various methods

is overly complicated

Let’s turn your data into Analytics!

Setting the Foundation: What you’ll need

1. Determine the banks in scope

2. Determine the accounts in scope

3. Know which accounts are open/active and for

what company/subsidiary?

4. Think about how you want to organize and

present your data? What questions do you want

to answer at a high level?

One of the biggest

challenges for both

the bank and the

corporate is the

collection of

information

Collecting Big Data can be a Big Problem

Collecting historical statements

Stacks of PDFs

No AFP Codes on statements

Managing bank service name changes

Appropriate classification of the data

Many countries don’t even offer fee statements


Banks can’t go backward and create electronic files

Historical data will be in Pdf or Excel if you are lucky

PDFs can sometimes be read by a PDF reader

With some small banks or foreign banks you have to grab the data as best you can from previous day reporting files.

12


Benefits Drawbacks

Bank Electronic Files (EDI 822,

Twist, camt 086)

• Best source of information (very detailed and comparable information

thanks to AFP codes)

• Limited involvement of internal resources

• Recognized as the industry standard.

• Improves data collection process going forward (long-term win)

• No manual manipulation (direct from source)

• All banks outside of the US are not currently able to provide

the industry standard format

• Client ‘set up’ required within bank system which can take

time and possibly money. Price to be negotiated with the bank

• Receiving historical data in this format is rarely possible.

Bank Reports-System Generated in

Excel/CSV

• Good level of information (most of the time)

• Possible download from bank portals

• No manual manipulation (direct from source)

• A few banks provide enough detailed information

• Considered a ‘convenience format’ so totals are not 100%

accurate – small, generally insignificant variances can exist.

Standard Excel questionnaires sent

to banks

• Limited involvement of internal resources

• Consistent Excel files allow automated process

• Banks may not be willing to fill in the questionnaire

• Quality of information provided is variable

Bank Reports (PDF or paper-based)

• Official Record by the bank – 100% accurate

• Generally accessible online

• Manual data entry

• Information provided are of variable quality

• Huge involvement of treasury team during the data collection

phase

Other- TMS export/ MT940/ Excel

questionnaires manually filled by

client or bank)

• Easily accessible • Longer process

• Level of information provided can be poor

• Huge involvement of internal team during the data collection

phase

• Integrity of manipulated data is a concern

Data Collection Options - In Order of Preference and Quality

“Bank Services Billing” is an ISO 20022 standard,

electronic bank ‘bill’ format known as camt.086

Transmits bank balance, service charge, tax, currency

& adjustment data

Designed to be US 822 equivalent on global scale with

the addition of tax & currency data

Uses billing codes (Global AFP Service Codes) to

standardize identification of bank services.

What is the BSB?

American National data collection presented

its own unique challenges

2,244 statements manually entered to give a

historical picture of fees for the past 12 months at a

detail account level.

1 bank provided CSVs, others were PDFs that were

unable to be converted

400+ hours of manual entry

What do you want to know?

You have the data, what’s next?

Common Questions Treasurers Ask

1. Where do I have bank accounts and what does my banking landscape look like globally?

2. Where can I get the information needed to put on month-end and quarterly reports to ensure appropriate cost allocation?

3. What should I budget for bank fees?

4. Are the banks charging what they promised? Should I approve this invoice?

Common Questions Treasurers Ask

5. How do I compare fees from one bank to another?

6. Is my staff performing the way they should? How can I make sure we are not internally costing us money in the way we are processing and gain visibility into my service centers or remote teams?

7. How much do we spend on checks? How can we monitor volumes over time to show conversion from check to ACH?

Where do I have bank accounts and

what does my banking landscape

look like globally?

Sample Heat Map of Fees by Country

American National’s fees are domestic-only but classifying fees by currency and/or country will easily allow you to get a global high level picture of your bank relationships

Where can I get the information

needed to put on month-end and

quarterly reports to ensure

appropriate cost allocation?

Tagging Bank Accounts

Classifying accounts by company, type, entity,

country, region, service center, etc. will allow you to

easily perform fee allocations needed for monthly

or quarterly reports

American National’s analytics on the organization

Property & Casualty

Life & Health & Annuity

Other

Global Gross Fees by Company Type

Company Name

What should I budget for bank

fees?

Monitoring fee trends

by quarter will

improve budgeting at

the individual entity or

company level.

Access to data will help you budget for

initiatives that may impact fees.

Are the banks charging what they

promised? Should I approve this

invoice?

Food for thought

Banks are the only vendor allowed to pay

themselves each month without going through an

official approval process.

The most junior employee is generally given the

task of approving one of the largest vendor invoices

monthly.

Due Diligence: What data do you need?

• Pricing Grids for each bank

relationship.

• Pricing per country for international

relationships.

Historically, American

National would

perform spot checks

of fee statements and

research only when

necessary. Billing

errors were routinely

found.

American National results

Bank Credits Identified

Bank A (Large Local) $1,355

Bank B (Large Regional) $1,302

Bank C (Local) $67,182

Bank D (Money Center) $15,146

Total Credits Due $84,985

Identified $84,985 in credits owed

by the banks over the past 12

months.

How do I compare fees from one bank

to another?

Data Analytics

are only as good

as the data

classification

The AFP Service Code © Solution

• Since 1986, AFP Services Codes© have been recognized as the standard

for identifying balances and charges that appear on account analysis

statements and in responding to RFPs in the US.

• Updated in 1997, 2004, 2008, 2013* CALL FOR VOLUNTEERS!

• Assigned by bank product managers

• Global Service Codes created in 2012 and SIGNIFICANTLY updated in

new 2018 version available now.

• US Codes are mandatory in EDI file. All major global banks have agreed

to use the AFP Global Codes in BSB files (even though field is not

required)

The Major Classifications within the AFP

Service Codes ©

Domestic or International

Maintenance, Transactional, One-time

Processing, Exceptions, Reporting

Delivery method – Automated or Manual– Transmission/Internet/AutoFax = Automated

– Paper/Fax/Phone = Manual

Classifying International Services is a huge challenge!

010000 vs ACT10000

• Separate code set designed for global services

• Allows for comparison of bank charges by category and aggregation of category across banks.

• Challenge is tying the two code sets together. Before buying a software make sure you ask how this mapping is performed globally, across US and Foreign banks.

• BSB files may contain AFP Global Codes while EDI 822 files contain AFP US Codes.

AFP Global Service Code ©

Example of how

mapping helps

corporations

understand bank

services

ACT40006

Internet Banking Access - File Export

Charge to export a file from the Internet banking system for

any product. This may be a per file charge or monthly

maintenance fee.

CD FI FILE EXPORT

CDIR-AUTO FILE & RPT DEL

CITIDIR FILE EXPORT

CITIDIRECT FILE EXPORT

COM C.MOV.EXTRC.SERV

COM CAB.MOV.EXTRAC

COM CABRO.MOV.N SERV

COM CORP.DEP.EXTRAC

COM CORP.EXTRAC.SERV

COM D EXTRACT.SERV

COM DEP.EXTRACT.SERV

COM EXTRAC SERV

COM EXTRC ACMOV SERV

COM MOV.EXTRACT.SERV

File Export

AFP Service

Name

AFP

Definition

AFP Global

Code

Proper mapping

helps

corporations and

banks understand

the same service

across multiple

countries

ACT10002

General Account Activity - Debit/Credit Posting

Charge for posting a debit and/or credit to an account.

Brazil

Transaction fee

Honduras

COM ACUM.TRANSACT.AC

COM ES&CHRG TRANS.

Ireland

FTN POSTING CHARGE

NY OTHER DEBIT/CREDIT

Mexico

COM TRANS FISCAL ACC

U.K.

TRANSACTION CHARGES

U.S.A.

FTN POSTING CHARGE

NY OTHER DEBIT/CREDIT

AFP Global

Code

AFP Service

Name

AFP Definition

Bank Service

Name from BSB

in each country

AFP Codes displayed by US banks on PDFs some of the time.

40% accuracy rate in code assignment

Burden of data classification falls on the corporate

Two code sets are not managed well by most vendors for global reporting

Accuracy and

Consistency of

mapping is key

to the success of

the analytics you

wish to perform

AFP Accredited Service

Code Provider Program

The AFP Service Codes Accredited Provider Program is

designed to increase standardization in reporting bank

compensation by recognizing banks that are using the AFP

Service Codes© consistently with the standard.

AFP Accredited Service Code Providers

Bank of Montreal/Harris (US and Canada)

Capital One

Citibank (Globally)

City National Bank

Hancock Whitney

People’s United Bank

Signature Bank of New York

Texas Capital Bank

MUFG Union Bank

Wintrust

Confidential Large Global Bank

Banks can realize many internal benefits from

undergoing a mapping project

– RFP responses

– Customer Self Service – 37% decrease in Customer Inquiries

– Simplifies Pricing Analysis across branches and regions

– Provides a charge code starting point for billing system rollouts to new regions/countries

– Make customers happy ☺

2 banks

provided no AFP

Codes on the

statements at all

53% of American

National’s 398 services

required mapping or re-

mapping

American National Mapping

Bank % Mapped # Services Mapped

Bank A (Large Local) 100% 39

Bank B (Large Regional) 28% 35

Bank C (Local) 100% 59

Bank D (Money Center) 44% 77

Total # Services Requiring Mapping 53% 210

Data is entered and classified

Now we get to play!

American National Fees by Product(Top 10)

341

134

4922 11 6 5 2

0

50

100

150

200

250

300

350

400

Tho

usa

nd

s

Global Gross Fees by Product

Understanding

your fees starts

at the top

American National Cross-bank Analytics

AFP Industry Standard Service Name Bank A Bank B Bank C Bank D

ACH Originated-Debit/Credit $0.14 $0.01

ACH Input - Automated - Direct Transmission $6.00 $4.80 $10.00 $10.00

ACH Return Item - Debit/Credit $0.65 $1.92 $5.00 $4.00

ACH Originated-Debit $0.05 $0.12 $0.07

ACH Return Item Notification - Automated via Internet - Maintenance $0.65

General ACH Module Maintenance $107.50 $25.00 $127.50

ACH Originated via Transmission-Credit $0.05 $0.45 $0.23

ACH Originated - Stop Payment - Automated $1.92

ACH Return Item - Unauthorized $5.65 $7.05

Special ACH Service - Notification of Change - Automated $1.65 $4.00 $5.00

Unit Price Comparison

AFP Codes were used to create cross-bank

charts/ graphs as well as RFP pricing

template and models

Charge Per

Life & Other

Average

Monthly

Volumes

Property &

Casualty

Average

Monthly

Volumes

Per item fee in

USD

15 Paper Disbursement Services

200010 Paper Disbursement Reconciliation Maintenance - Full Account 72 36

200020 Paper Disbursement Reconciliation Maintenance - Partial Account 12

200110 Paper Disbursement Reconciliation Processing - Full Item 587,700 20,987

20020B Check Issuance Information - Internet Item 2,188

20020F Check Issuance Information Maintenance - Transmission Account 12 0

200299 Check Issuance Information - Aged Issuance Item 137,526

200306 Paper Disbursement Reconciliation Reports - Internet (PDF) Account 72

200324 Paper Disbursement Reconciliation Report - Custom Report 1,991

200610 Paper Disbursement Reconciliation Output Files - Transmission File 747

200620 Paper Disbursement Reconciliation Output Item - Transmission Item 567,912

American National Fees by Type

Classifying fees allows

you to start asking

intelligent questions.

What are the ‘extra’

services? Why so many

exceptions?

Is my staff performing the way they should?

How can I make sure my team is not internally costing the company money due to the way we

are processing and gain visibility into my service centers or remote teams?

Bank fee

statements help

give you visibility

into your treasury

operations

Compare Regions, Depts, Banks

Central visibility into activities of subsidiaries

Access and Archive statement data automatically &

eletronically

American National Action and Results

Additional classification tags were assigned in the

software to identify fees caused by exceptions,

extras, punitive charges, and manual services.

American National’s big data provides big

insights into treasury team performance

Reviewing Punitive

charges identified an

unusual spike in stop

payment charges at

one bank

Bank January February Total Punitive Cost

Bank A $33.12 $17.99 $51.11

Bank B $170.09 $70.06 $240.15

Bank C $7,995.00 $6,945.00 $14,940.00

Bank D $135.69 $224.18 $359.87

Grand Total $8,333.90 $7,257.23 $15,591.13

Bank A Bank B Bank C Bank D

Research identified that one

type of company (Life &

Health) caused $15k in stop

payments in 2 months

American National’s ‘big data’ provides big

insights into treasury team performance Why are we

spending $119k

in manual

services?

Manual Service Total Sum of Volume Total Cost

ACH AUTHORIZATION INVESTIGATION 147 $7,350

ACH FAX SERVICE 9 $1

ACH MAIL SERVICE 6 $2

ARP PAPER STATEMENT/REPORT DELIVERY 6 $90

ARP PAPER STMT/REPORT MONTHLY BASE 6 $150

BRANCH DEPOSIT 160,935 $96,561

CASH ORDER FEE IN A WF BRANCH 762 $3,810

CEO CHECK ISSUES-ITEM 3,897 $585

DDA STATEMENT - PAPER 6 $150

E-BOX OPERATIONS MANUAL RETURN 177 $620

PHOTOCOPY CUSTOMER SERVICE - ITEM 3 $60

POS PAY CHECK VERIFICATION CALL 21 $105

SUB ACCT STATEMENT FEE 861 $8,610

WIRE INVESTIGATION 18 $1,170

WIRE OUT REPAIR SURCHARGE 3 $27

Grand Total 170,502 $119,772

Reviewing “Manual” charges

identified numerous

instances of phone calls,

paper statements,

investigations, and

expensive statement

charges

How much do we spend on checks?

How can we monitor volumes over time

to show conversion from check to ACH?

Determine the VOLUME of check payments

Filter for:

Payments + Checks + Activity + AFP Name/Code

BE CAREFUL NOT TO DOUBLE VOLUMES

American National Volume of Checks

Global Bank Group January February March April May June Total

Bank A 31,576 29,544 28,117 32,528 31,838 31,464 185,067

Bank B 1,840 1,673 1,904 1,897 1,704 1,493 14,013

Bank C 2,426 2,523 2,921 2,546 5,435 3,770 23,761

Bank D 50,235 39,998 42,740 47,632 46,835 45,182 372,981

Grand Total 86,077 73,738 75,682 84,603 85,812 81,909 595,822

Determine the COST of check payments

American National Cost of Checks

Global Bank Group January February March April May June Total

Bank A $11,375 $10,663 $10,166 $11,690 $11,449 $11,322 $72,246

Bank B $3,158 $2,957 $3,258 $3,289 $3,067 $2,932 $25,717

Bank C $10,312 $10,151 $3,503 $3,413 $6,276 $5,840 $72,564

Bank D $40,938 $33,393 $35,363 $38,862 $37,361 $37,518 $302,123

Grand Total $65,782 $57,164 $52,290 $57,254 $58,153 $57,612 $124,393

Filter for:

Payments/Multi/Other + All Check Services (“15+20”

AFP Codes + Debits Posted where necessary)

American National was able to calculate the

cost per check across providers

The same

could be

done for any

product!$0.91

$2.45

$3.70

$1.11

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Bank A Bank B Bank C Bank D

Cost Per Check

American National

plans to monitor

check and ACH

volume over time to

measure the status

of internal payment

initiatives

Monitor payment types over

time

0

500

1,000

1,500

2,000

2,500

January February March April May June July August

Tho

usa

nd

s

ACH vs Check Volume

ACH Checks

The AFP Codes within American National’s software is the

foundation that allows for analytics to answer many more

questions

What do we

spend our

money on?

Are fees driven by

activity, maintenance

or implementation

charges?

Checklist to turn your big data into actionable analytics

1. Ask banks for electronic files of bank fees in BSB or EDI format

2. Determine best delivery method (FTP, email, etc)

3. Ask the bank if they are AFP Accredited (or you will be mapping everything yourself to achieve analytics!!)

4. Choose a software provider

5. Classify all data!!

6. Gain visibility into your fees, volumes, and treasury organization

What you can do?

Join the CGI-MP Task Force

Volunteer for US AFP Code Update Group

Write bank management – Ask for Accreditation!

Join LinkedIn Discussion Group “BSB International Bank Billing”

Participate in industry surveys

Raise your voice!!

Bridget [email protected]

Denise [email protected]

Michele [email protected]

Appendix

The CGI-MP working

group is made up of

corporations, vendors,

and global banks

dedicated to improving

global billing capabilities

SWIFT CGI MP Taskforce began

January 2015 to harmonize

implementation of the TWIST or

Camt.086 Version of the Bank

Services Billing statement for

global bank fee reporting.

Follow developments on

LinkedIn and join the CGI! (Group “BSB International Bank Billing”

CGI-MP: Common Global Implementation – Market Practice

CGI is driven by customer demand for multibank coordination of

implementations

Objectives – Corporate View

• Focus on finding potential gaps in the AFP Global Service Codes® - DONE!

• Enhance BSB/camt.086 reporting to be used as e-invoice –DONE!

• Define and implement standardized nomenclature/xml schema

• Motivate the banks to realize that a standardized billing landscape and comprehensive billing for corporates (and other FI) also generates bank internal benefits (business case) IN PROGRESS!

2018 CGI Bank

Survey

Electronic BSB/EDI

File Availability

as of October

2018

Number of Global Banks Providing Files by Country

0 1 2 3 4 5+

Redbridge can

confirm bank fee

data is now

available from 90

countries and 79

Global banks all

over the world

The availability of standard files has increased globally –

The future is now!

Global Banks Providing BSBBank of America Merrill Lynch,

Barclays,

BNP Paribas,

Citi,

Commerzbank

Danske Bank,

Deutsche Bank,

HSBC,

ING Bank

JPMorgan,

SEB (Skandinaviska Enskilda Banken),

Société Générale,

Standard Bank

Standard Chartered Bank,

UniCredit

Westpac

Credit Agricole (end of 2018)

Electronic bank fee reporting adoption has finally picked up

speed and is now being adopted by regional banks.

ISO

20022

BSB

ANSI X12-822

Most of the US banks and foreign

groups’ entities with cash

management footprint in the US.

5 Large international

banks


banks

TWIST

BSB

v3.1

2006 20121980 2018

ISO

20022

BSB


banks & regionals

89

40 39 37

2924 22

17

95

1 1

Citibank BNPParibas Bank B BAML Bank A HSBC DB Commerzbank Bank C Barclays Wells SG France

Number of Countries/Territories Supported Globally

Survey Says….

Citibank is the largest provider of BSB files by number of countries/territories however a significant number of

banks are offering the files in more than 20 countries. Large regional banks are the focus of expansion and

widespread adoption.

Citibank Commerzbank

BNP Paribas BankA

Deutche Bank Bank of America

HSBC Bank B

Number of Banks

supporting at least one

format:

8

Banks supporting at least

one format:

Asia Pacific


BNP Paribas Bank A


HSBC Bank B

Bank C

Number of Banks


format:9

CEEMEA


one format:


BNP Paribas Wells Fargo


HSBC Bank A

Bank B

North America

9Number of Banks


format:


one format:

Bank Participation by Region


BNP Paribas Bank B


HSBC SG France

Barclays Bank C

Bank A

Western Europe


one format:

11Number of Banks


format:

Bank of America

Citibank

Bank A


one format:

South America

Number of Banks


format:3

Survey Says….

All banks are offering statements on a monthly basis but a number offer alternative date ranges

Only one bank offers the ability to receive the statements in all channels. All but 3 offer online.

Only one bank does not include AFP Global Codes. 42% are already offering or planning to upgrade to 2018 Codes in the coming 6 months.

2 of the 12 banks who responded to the survey are AFP Accredited Service Code Providers

Question Answers Bank A Citibank BNPP Bank B BAML HSBC Deutsche Commerzbank Bank C Barclays Wells Soc Gen

EDI822 Yes Yes No No Yes No Yes No No No Yes No

TWIST V 3.1Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Yes

camt.086.001.01No Yes No Yes Yes No Yes Yes Yes Yes No Yes

camt.086.001.02 Yes No Yes No No No No Yes Yes No No No

Monthly Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Quarterly Yes Yes Yes No No No No Yes No No No Yes

Yearly No No Yes No No No No Yes No No No No

On demand Yes Yes Yes No No No No Yes No No No Yes

Email Yes Yes Yes No No No No No No Yes Yes No

SWIFT Yes No Yes No Yes No Yes Yes Yes Yes Yes Yes

Host-to-Host Yes Yes No Yes Yes Yes Yes No No Yes No Yes

Online Banking Portal Yes Yes Yes Yes No Yes Yes Yes Yes No Yes No

2018 AFP Global Codes No Yes Yes No Yes No Yes Yes No No No No

2012 AFP Global Codes Yes No Yes Yes No Yes No Yes Yes No Yes Yes

Bank

billing

format

BSB files

frequency

Delivery

methods

Industry

standard

Bank Challenges

Collecting data on an industrialized scale

– Fragmented billing and reporting systems landscape

– Separate reporting engines for taxes/account maintenance/transactions

– Taxes required in order to satisfy auditors

Building a compelling business case to secure investment

– Bank funding first allocated towards regulations and mandatory issues

– Securing investment that will not reflect ROI - Relationship vs. Short term ROI

Taking pressure off of Relationship Management & Operations

– Customer inquiries, pricing reviews, and billing inconsistencies

Limited coverage

– BSB only available for accounts on a subset of the billing engines

treasury's big data: how to transform analysis statements

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