These are some of the conclusions drawn from our biannual survey of

readers' attitudes toward their cash management banks. The survey, which

was mailed in May and June to treasurers, CFOs and others with cash

management responsibilities, was completed by 214 respondents. When

asked how satisfied they are with current banking services–and given the

opportunity to compare their banks to car models–they told us, often with

brutal candor. More respondents than we'd like to acknowledge mentioned

that their banks were like Ford Explorers. Before we delve into the criticisms and quibbles, here is the good news.

Most Admired Banks

Asked to pick the top three banks for domestic cash management services

in 1,2,3 order–regardless of whether they used the banks

themselves–survey re-spondents were almost evenly split between Bank

of America and JP Morgan Chase. Each received 20% of first-choice picks from the 161 respondents to the question.

Wachovia took second place as most admired bank, with 16% of the vote,

followed by Citibank, which got 10%. The remainder of the votes were split up among 18 banks, led by Mellon (8%) and Bank One (6%). No other

bank received more than 3% of the total.

A more accurate gauge of reputation–and of the size of the companies

courted by the different banks–may be determined by looking at our weighted results, which give credit for first-, second- and third-place votes

(see table).

Asked to pick the best banks, by reputation, in international cash

management, whether or not they used them, survey respondents voted overwhelmingly for Citibank on both a weighted basis and on a simple tally

of first-place choices.

Diane Reyes, head of Citibank's North American business management

unit, has a decidedly mixed reaction to the company's domestic ranking. "We're investing more in treasury services in 2001 than we did in the two

previous years," she says, "and a lot of that is going into domestic services." But she

acknowledges that while Citi has handily distinguished

itself globally, it is caught domestically in a "mature U.S. market with a plethora of services and

banks."

One Man's Meat…The choices of most-admired banks, to be sure, can be highly personal.

Elaine A. Kloss is vice president and treasurer of Ventiv Health, a $416

million pharmaceutical sales and marketing company in New York that uses JP Morgan Chase. She picked it as her most admired domestic bank

because what was then simply Chase was crucial to helping her centralize treasury when she arrived at Ventiv in the fall of 1999 as the company–an

amalgam of six different entities–was being spun off by its former parent, Snyder Communications. "I had no idea how many accounts and how much

cash we had where," she says. "Now everything rolls up to a concentration account

and we know our cash position exactly. Chase helped us do all

that. And when I need to talk to my account rep, which I do several times a day, he's always available."

Ludwig Guarino, treasurer of Volt Information Sciences, a $2

billion-revenue employment firm in New York, is decidedly less enthusiastic about the bank that Volt has used for 25 years (going back to

Manufacturers Hanover Trust). To our car query he likened Chase to (yawn) a Chevy Blazer. "It can carry a load 'like a rock,' but it's not the

smoothest ride."

Jennifer Ceran, assistant treasurer in charge of international cash

management at Cisco Systems, the $22 billion data router company in San Jose, Calif., lauds Bank of America as a Honda Accord because of its

"high customer service, value for the money and low maintenance." But the treasurer of a $2.6

billion Midwestern auto parts supplier, who uses

BofA as his primary "outflow" cash management bank, scorns its "high-powered" offerings as overpriced. To the director of treasury

operations at a small Midwestern electronics company, BofA is a Chrysler–"good design, marginal execution and above-average cost." (For

more car metaphors, see "Steering Your Banks," page 34.)

The treasury manager of a major pharmaceutical company criticizes

Wachovia for falling down on the job with simple matters such as reconciling checks, while several other respondents lauded Wachovia

precisely because of its "reliability." Alane Flemeng, cash management supervisor of Bi-Mart Corp., a $420 million, privately held discount

warehouse store operator in Eugene, Ore., banks with BofA but wistfully remembers the "southern charm" of her former banker, Wachovia. "They

were distinctive in being very open with you, and even caring. They knew how to help you on a bad day without being gratuitous. They didn't waste

your time."

Care and Handling

Her comment is telling. When we asked respondents to list the qualities

most important to them in choosing a cash management bank, few ranked personnel as important, although customer service was high. In follow-up

interviews with almost 20 respondents, though, personal care and attention–or the loss of it–came up as a recurring theme. "All the banks

are organizing central customer-service centers," says Phil Davis, assistant treasurer of Atlanta-based Imerys, the subsidiary of a French chemical and

+mineral conglomerate. "You get an 800 number to call, not a person." He says he uses SunTrust for cash management because it is "resisting that

trend a little."

The fact that the same bank can get damned as well as praised comes as

little surprise to bankers and their customers. But the different perceptions

are increasingly due to deliberate calculation.

"If you are helping them meet or exceed their ROI [return on investment] or risk-adjusted

return-on-capital targets, you're likely to get good service,"

observes James R. Haddad, vice president of corporate finance at $1.3 billion Cadence Design Systems, San Jose, Calif., which makes software

for chip designers. "If you're not, well, banks are not at all reluctant to end

a relationship or just let it dangle with minimal service until the customer

decides to move."

If only that were so, responds Jane Verkouteren, senior vice president of

global cash management at First Union Bank in Charlotte, N.C. "Ideally, service would be linked to the profitability of the account," she says. "But

in fact, our segmentation is based more on the complexity of the account and the kinds of service they're likely to need."

That could explain why some of our survey respondents responded to the

question–What product/service would you like to see your principal bank add to its cash management offering?–with some very basic requests for

things that banks have long offered. Several customers of BofA, for example, want

the bank to provide electronic account-analysis statements,

Internet access and better lockbox imaging. Numerous customers of Morgan Chase and Citi

requested Internet access.

"We build platforms around the needs and budgets of different customer

segments," says Nick Alex, senior vice president and manager of global product and strategy in BofA's global treasury services group. "Not every

service is appropriate for every platform." For example, the bank offers Web-based

account-analysis statements to middle-market customers, while

large corporate customers typically get theirs by EDI transmission. The bank has six

primary lockbox processing sites in major centers that feature

state-of-the-art image technology, but 12 other sites in smaller cities don't have all the

technology, he says. "We're the national leader in image

lockbox services, but with 18 centers, we don't think it's economical for our

customers to put the full technology platform in each."

While banks do not seem to be pushing hard to distinguish themselves from

one another in their largely commodity-like service offerings, our survey does give a hint of how an enterprising bank that wants to make a name in

cash management can gain an edge. Asked if they would allocate more business to a bank that linked cash management reporting to their ERP

systems or other business software applications, 47% of 211 respondents (99) said unequivocally that they would. (Nearly 32%–67

respondents–had no opinion, while 21%–45–said it would not affect their allocation decisions.)

The Technology Question

In terms of Internet-based cash management services and e-commerce

ventures and alliances, our respondents were disappointed. "Banks have a tendency to overtalk and underperform when they're selling new

technologies," observes Anthony D. Ishaug, director of treasury and corporate development at Department 56, a $250 million giftware

wholesaler in Eden Prairie, Minn. "When their tech guys come up with something new, they try to

sell it before its time. I've heard a number of

promises that weren't kept."

Bankers plead guilty to overselling. Internet banking unleashed "aggressive

marketing of capabilities before they were ready," says Francine Miltenberger, executive vice president in charge of treasury management at

PNC Bank. "It was hard to separate fact from fiction."

As for e-commerce products, Kevin Kehoe, senior vice president and

Western Hemisphere regional executive for J.P. Morgan Treasury Services, says, "A lot of banks really weren't ready, and neither were a lot

of clients." Bankers also frayed relationships with their treasury contacts by going around

them to people in purchasing, A/P, and even sales and

marketing. "Most of it had some impact on cash flow, but treasurers often were left out of the

loop," says Kehoe.

Kurt Gatterdam, treasury manager at Elmer's Products, a unit of Borden's

in Columbus, Ohio, grouses that his cash management bank's efforts to move him to the Internet have been disastrous. "I run into problems every

day," he complains. "If I had stuck with the old, reliable tools that are not

leading-edge, I wouldn't be having all these problems." He adds that he'd

love to nail his lead bank in print but begs off because "we're in the middle

of negotiating a line of credit."

First Union's Verkouteren, for her part, points a finger at customers.

"Banks want to move to the Internet but have been disappointed that customers, especially larger corporations, are slow to go there," she says.

"Our small businesses use it more for the simple stuff like balance reports, but, overall,

usage has been lower than we hoped."

What You Want

When asked to rank the qualities most important in choosing cash

management banks, respondents at companies of all sizes speak with close to one voice. The two critical services that dictate the choice of a primary

cash management bank are accuracy and customer service. (One of our survey respondents, to be sure, sneered at our listing of accuracy. "That

goes without saying," she wrote.)

As the table on page 32 indicates, credit commitments rank among both the

most important and least important reasons for choosing banks, depending on the company but unrelated to size. Among respondents from companies

with revenues over $1 billion, 12 of 55 respondents said credit commitments were the most important factor for choosing a bank while 11 of 55

designated it the least important. Cash managers from small companies were similarly split, with 16 of 73 ranking it most important and 16 ranking it

at the bottom. Respondents from 49 mid-sized companies were similarly split 9-9 in

ranking credit most or least important.

"If you want my business, you'd better pitch your willingness to participate

in the credit group," says Ron Pederson, treasurer of $900 million AAF-McQuay of Louisville, Ky., a manufacturer of air conditioners and air

filters. But Pederson, who says he's happy with many of the cash management services he's getting, concedes he is on the wrong side of a

trend. "They've really short-changed credit in their marketing," he says of

the banks.

Services Rendered

Our survey asked treasury managers to rate their banks' performance in 13

basic cash management services–or leave them unrated if not used.

The least-used services are multicurrency accounts (24%) and electronic

bill presentment and payment (31%), while balance reporting is used by almost everyone (94%). Lockbox, at 92%, was the second most commonly

used service, followed by zero-balance accounts (84%), ACH (81%), account reconciliation (80%) and controlled disbursement (77%).

Those responses may say something about the size and sophistication of

our survey universe–40% were from companies with under $500 million of revenue in 2000, 35% from those with over $1 billion of revenue and

25% from mid-sized companies.

In rating levels of satisfaction, respondents gave the lowest grades to

emerging areas such as EBPP and multicurrency account management. Their highest went to zero-balance account management, though other core

services (account reconciliation, cash balance reporting, check imaging, clearinghouse payments, controlled disbursements, domestic electronic

funds transfer and positive pay) also scored well.

If there was one finding from the survey that stood out among others, it

was customers' unhappiness about bank mergers.

More than half (111 respondents) have endured a merger in the past two

years, and 34% said they are less satisfied with their cash management bank as a result. A slim 12% (five respondents) said they were more

satisfied. About half (54%) said they experienced no change in services.

FleetBoston (created from Fleet Bank's purchase of Bank of Boston) drew

the greatest number of merger-related darts, primarily from customers in the under $1 billion of revenue market that Fleet targets. "Integration of

systems was an operational disaster," says one Fleet customer. "They picked the worst of the two platforms and customer service became

nonexistent." In a phone interview, he tempered his comments, saying that "general unresponsiveness" continues but "the bank recently announced its

intention to improve this situation."

Several respondents used the survey simply to vent. "You don't know what

I've been through!" gasped a customer of Fleet. "I hate them. Huge fees and waits." Another was less severe. "We've lost that 'walk across the

street feeling' we used to have, but the services are good and the relationship has

been long." Cash-management officials at Fleet did not

return calls for comment.

Charlotte, N.C.- based First Union (which has been widely criticized for its

mishandling of integrating Pennsylvania-based CoreStates Financial) and Chicago-based Bank One (whose major merger with First Chicago-NBD

has been glitch-heavy) also inspired several hostile comments.

"[First Union] lost touch with their customer base," observes Robert

Shahpazian, treasury manager of AEP Industries Inc., South Hackensack, N.J., a former CoreStates customer. "First Union is spread out all over the

place. My account rep is in Pennsylvania, my cash management person is in New Jersey, customer service comes from Jacksonville, Fla. You dial

the 800 number and talk to whoever you get."

Crabby But Loyal

A Bank One customer complained, "They merged four years ago and are

still running on separate systems." Another writes that promised access to First Chicago's expertise "has not materialized–it appears to be an internal

politics issue." A customer of Firstar Bank (being merged with US Bank) cited "mass confusion. It's so large no one knows what is going on."

But some respondents say patience has its rewards. "Once they get to one

platform, life is better," notes BofA customer E. David Wiseman, assistant treasurer at $100 million Fike Corp. of Blue Springs, Mo., which makes fire

extinguishers. "I'm glad it's over, as are they, and that service has stabilized."

"Mergers are tough," says PNC's Miltenberger. "They suck up incredible

amounts of management time and attention that are no longer available to address customer satisfaction. Disruptions seem to be inevitable. They

force you to make choices, and whatever you choose will upset one group of customers." Miltenberger can criticize because PNC has been

merger-free for several years. But she says she's lived through several personally and can

attest to the strains.

Almost one third of our survey respondents expect to reduce the number of

banks they use for cash management in the next year.

However, their bark may turn out to be worse than their bite. Despite the

gripes, companies rarely switch. The average number of years with current banks ranges from 13 (median 10) at companies with over $1 billion of

revenue through 12 (median 8) at those in the middle-market and 9 (median 6) at companies with under $500 million of revenue.