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Updates in Banking and Related Services
Presented by Tim Pinon and Emily Upshaw
Polling Question #1
•How many Bank RFA/RFP’s have you been involved with over your career?
A. None
B. Only one
C. Between two and five
D. More than five
Objectives
• Discuss banking in current investment environment
• Review banking subjects in today’s world• Best practices
• Bank RFA process
• Fraud prevention
• Emerging trends
• Touch on merchant services
Banking Today
• Little incentive for big offers
• Importance of online capabilities and services
• Contract renegotiations
•Mergers and acquisitions
• Cash management includes banking
Mergers & Acquisitions
•Check the language in your contract
•Monitor changes post-merger
•Expect personnel and procedure changes
Manage Your Cash
•No Fee
•Hard Interest
• Earnings Credit
•Hybrid
• Account Analysis Statement
Best Practices
• Review current contract• Account options? Floors offered?
• Double check pricing• Review account analysis statement
• Talk to your banker• Other ways to save? Other account options?
• Review cash management strategies• May have changed since last RFA/RFP
Are You Ready?
•Depository selection legislation• Investment & collateral legislation• Purchasing & contract legislation• Establishing documents• Purchasing policy & purchasing procedures• Investment Policy/Collateral Policy/Financial Policies• FIRREA
Tips & Suggestions• Allow Six Months•Get RFA/RFP to Right Person•One Month for Response•Minimize Hard Copies• Provide Word RFA/RFP and Excel Fee Schedule• Accept Links to Data•Maximize Fraud Protection• **Compare RFA/RFP to Account Analysis!**
Bank Depository RFA -“Easy” Timeline• Month One – Research, Preparation, Approval• Distribute RFA• Make sure it gets to the right recipients
• Month Two – Banks Respond – allow enough time• Response time signals your intent
• Month Three – Analyze and Recommend• Demos and references
• Month Four – Formal Approval and Execution• Months Five and Six – Transition
10
Bank Survey Questions – Poll #2
•What size bank does your entity use?• a) Large National Bank – i.e. Bank of America/Chase/Wells Fargo• b) Regional Bank – i.e. Amegy / BBVA/Capital One/Frost/ PlainsCapital / Regions• c) Community Bank – i.e. American National / First Financial• d) Not sure what category our bank fits in
Fraud Prevention•Bank Statements – online only – why?•Check Positive Pay including Payee Validation•Why important• Challenges
•Post No Check feature – why use?•ACH Positive Pay• Check Conversions can circumvent DDA Positive Pay• Business checks are exempt from conversion,
however…
Fraud Prevention – Vendor / Employee Impersonation• Transparency provides lots of information for fraud• Fraudsters are bold and they play the long game• The vulnerability is at the staff level, not the Finance Director level• Procedures for changing bank accounts, and setting up new vendors - Vet the information provided• Require a recent invoice number• If received via email, call an established phone number
• Recently - Employee payroll deposit account changes
Emerging Trends
•Bank Branches – what is the future?• Capital intensive – physical property and personnel• Possible bank availability implications – Chapter 105• Customers doing everything online or at ATM• Remote Capture Deposit• ATM – Deposit Only Cards / Poll #3
Emerging Trends
• ATM – Deposit Only Cards / Poll #3• Have you made a deposit to your personal bank
account using an ATM?1) I’ve deposited cash2) I’ve deposited checks3) I’ve deposited cash and checks4) I’ve never made a deposit to an ATM
Emerging Trends•Armored Car / Smart Safes•What is a “Smart Safe”• Requires a contract with an armored courier
• Who offers this?
• Is it a fit? Budget consideration vs. Benefits
• Are Governmental entities currently using this?
Smart Safe – Two Local DFW Cities /One Large ISD• DFW City - using for six years• They are “sold” on the service – security and internal controls• Eliminated cash over/short issues• Safes are located throughout the City functions where they
accept cash:• Natatorium, Senior Center, Event Center, Court, Police Department, and
Utility Department• Suggest a separate RFP outside of the Depository Bank
Solicitation• COVID impact on cash collections – will that continue?
Online Banking Checks and Utility Billing
•What is an “E-Check”? (Can mean different things)• Payment that drafts your bank account via ACH• Telecheck - Walmart•Online checks created when consumers use the bank
where they have their personal account
Online Banking Checks and Utility Billing
•The Pain Points of Online Banking Checks• Checks don’t come with the coupon to provide the
account number• Customers wrongly assume that when the money
comes out, the City has their money• This is not the case if the City is not having the items
converted to ACH
• Customer gets charged late fees
Online Banking Checks and Utility Billing
•Solution – Electronic Lockbox / E-Box• Bigger banks typically offer, not as common with
smaller banks• Alternative option - Merchant Account Retrieval
System (MARS)• There are several 3rd party E-Lockbox providers
Emerging Trends – EMS Lockbox
•Who owns your City’s EMS payments lockbox?• Most cities use a 3rd party processor to handle the payments for
ambulance service calls• Often, the Third Party Administrator (TPA) owns the box• Why should the City own and control the lockbox?• It’s your money• Control of when you get your funds• Bankruptcy• Changing TPA
Emerging Trends - Zelle
•Poll #4 – Zelle/PayPal/CashApp/Venmo• Yes•No
•Using Zelle or similar services for your small disbursements• Usage is increasing• How it works – transfers sent via cell phone number
or email address
Emerging Trends - Zelle• Potential use for Utility Deposit refunds
• Customers closing out water deposits have just moved – forwarding issues• Address may change, phone numbers and emails don’t change as frequently• You don’t have to store sensitive information on your system• Small checks have a tendency to go uncashed• Escheatment
• Potential use for small payments such as refs for City leagues• Contract worker
• Who is using now? • Insurance Companies – settlement payments
Emerging Trends – Zelle – Challenges and Controls• Recipient isn’t setup on Zelle•What if payment is sent to the wrong number? • Similar to an ACH payment to a wrong account number—
good chance it may not be a valid number, but if it is…• Good news – these are often smaller dollar amounts
•Need controls in place to avoid internal fraudulent payments, but similar to avoiding other common abuses
Merchant Card Processor Survey – Poll #5•How many Merchant Service Providers does your entity use?
1) One2) Two3) Three4) More than three5) Not sure
Credit Card Processors - Challenges• Pricing structure is somewhat complex / unfamiliar• Multiple Merchant Service Providers (MSPs)• Different departments use proprietary software designed specifically
for their needs – Courts, Library, Parks, etc.
• Software vendors often “require” use of a specific MSP• Limits the ability to require bids/price competitively
• Divides collection totals among multiple providers
• Non-bank merchant service providers may request that a merchant services agreement be signed with a bank named by the provider
• Consider requesting the provider settle transactions using the City's depository bank
Credit Card Processors - Options• State Contract• Pros• No need to go through the RFP process• Most likely the best pricing available
• Cons • May sacrifice a little on the customer service side• Contract can change every few years
• RFP •May lead to better pricing from your current provider•May provide an opportunity to consolidate your
providers
Emerging Trends
•Mobile Banking Apps - Poll #6 •Do you currently use your bank’s mobile banking app for your entity?
1. Yes2. No3. Our bank does not offer a mobile banking app for
business
Emerging Trends•Moving Payments to ACH or Purchasing Card•Purchasing Card•September 11, 2001•COVID-19 underscores benefits•PCard• Small Payments• Travel• Controls• Rebates
Thank you – we welcome your questions!
•Emily Upshaw
•Tim Pinon
