Sweep accounts can help retain cash-management customers.

• Position: Marketing News

One way that banks can avoid cash-management account attrition is by broadening their product offerings with an array of sweep-account products, according to Bob Wiseman of Agiletics Inc., a developer of cash-management software. The company is located in Longwood, Fla.

Sweep products offer convenience for customers who need to manage their accounts and investments quickly and efficiently. Banks can attract new businesses from niche markets by offering specialty sweep products tailored to specific customer requirements, Wiseman says.

Sweep accounts allow banking institutions to furnish investment returns on deposits for their commercial customers. The sweep account automatically links a deposit demand account (DDA) with an overnight investment, such as a money market fund or other shortterm security (repurchase agreement, commercial paper, Eurodollar and so forth). A target balance is established, and any monies over that amount are automatically invested. If the balance drops below the target, then funds are drawn back in from the investment to cover any needed expenditures.

Sweep-account features are as variable as the companies that use them. For example, a business can determine the interest rate based on the amount of money invested--the benefit being the more money a business keeps with the bank and invests, the better rate of return it will receive, Wiseman says. Another feature is the ability to link multiple accounts' balances in order to achieve the best rate of return or invest the money into multiple investments for the purpose of diversity.

"It's incredibly convenient for businesses in that they don't have to forecast their cash flow," says Marilyn Hayes, sweeps product manager with Cleveland-based National City Bank. "They don't have to figure out where they want to invest it, they don't have to call the bank. It's just done automatically."

With an automated cash sweep and investing product, customers never over-invest nor under-invest. A predetermined amount is always invested...