The American Bankers Association is recommending a sweep account program from SEI Investments Co. for use by small banks.
SEI's CashSweep beat a program from a rival asset manager, Federated Investors Inc., for the trade group's endorsement.
Andrea Cernich, director of marketing at the Corporation for American Banking, an ABA subsidiary, said Oaks, Pa.-based SEI was chosen mainly for its strong family of funds and its experience working with community banks.
She added that CashSweep's Windows-based software lets banks monitor sweep accounts with little interference from the vendor.
Sweep programs move customer funds out of demand accounts at the end of each business day and into short-term investments such as mutual funds and Treasury securities. Such programs help banks sidestep regulations forbidding them from paying interest on business accounts.
According to a recent survey by Treasury Strategies Inc. of Chicago, 79% of all banks-and 77% of community banks with assets under $2 billion-offer sweep accounts. In 1997, $192 billion was swept into overnight investments, up 106% in just two years.
Banks charge a fee, typically ranging from $25 to $175 a month, for handling a sweep account. SEI, which gives bank customers 15 funds to choose from, charges $4,000 for installing its software in banks and also earns fees for managing the assets.
SEI manages more than $20 billion of assets. Jeanne Taylor, senior relationship manager for CashSweep, said it has been installed in about 70 banks, whose asset range from $45 million to $25 billion.