Companies are evolving into choosier shoppers when it comes tobanking providers. There has been a marked uptick in the number ofsmall and midsize companies that are issuing requests for proposalsto select a new bank, according to a quarterly survey byconsultancy Greenwich Associates, and the biggest thing motivatingcompanies seems to be the level of fees they're paying.

According to Greenwich, 20% of midsize companies issued RFPs inthe first half of this year, up from the 11% that did so in thesecond half of 2009. More than 15% of small companies issued RFPs,up from 7% in the second half of last year. Greenwich says the paceof RFP issuance is “truly striking” given that usually about 10% ofsmall and midsize companies switch banks in a given year.

“We had traditionally seen a real hesitation to move,” saysChris McDonnell, a vice president and consultant at Greenwich. “Tosee this increasing number of requests for proposals and that typeof openness to switching is bad news for the lower performers inthe banking space.”

The Greenwich data show that more than half of the small andmidsize companies cite bank fees as one of their top three reasonsfor issuing an RFP.

Don Ogilvie, independent chairman of the Deloitte Center forFinancial Services, and former CEO of the American BankersAssociation, says it's not surprising companies are doing what theycan to contain what they pay their banks amid an economic slowdown.“Everybody's trying to reduce expenses,” Ogilvie says. “They'relooking at every expense item.”

When it comes to cash management services, fees seem to befairly tame. The Phoenix-Hecht Blue Book of Bank Prices, which isbased on actual account statements, shows prices increased just2.2% in 2010, down from the 3.6% increase in 2009.

But McDonnell says companies have become more aware of the costof cash management services amid the downturn. As the economicslowdown ate into their bank balances, he says, it also ate away atthe earnings credit rates that previously covered a portion ofcompanies' cash management costs.

“When the accounts were fuller, earnings credits were being putagainst the treasury services, so companies did not have to paythat much for these products and services,” McDonnell says. “As thecash levels have come down, companies have to write a check forthat, so to speak. That's been a difficult adjustment for some ofthese folks.”

David Bochnovic, executive vice president at Phoenix-Hecht,cites “an increase in the frequency of discounting, which appearsto reflect the overall weakness of the economic recovery as banksmight feel the need to mitigate price increases to their strongercustomers.”

Deloitte's Ogilvie says companies are well-advised to keep aneye on bank fees because a number of recent pieces of legislationwill affect banks' revenue streams, which will likely lead to themto hike their prices.

“Because of many of the rules and regulations, banks' costs willincrease quite dramatically in the future,” he says. “And in somecases, they either are or will be prohibited from charging certainfees that they have charged in the past. When that happens, bankshave to make that up somewhere else, they tend to increase fees inother areas.”

Overall, the Greenwich survey results line up with other datasuggesting some sag in the economic recovery. The outlook on theeconomy is a bit bleaker, especially among midsize companies, just38% of which expect the economy to improve over the remaining sixmonths of this year, down from 48% who were expecting improvementover the next six months as of the first quarter.

Credit availability is another concern, with 53% of smallbusinesses and 41% of midsize companies saying they're finding itharder to borrow from their banks than they did a year ago.

For a piece from last year about the outlook for bank fees,see Bewareof Fee Hikes.