Gone are the days when banks could count on depositors seeking shelter from the recession. With rising rates, how can banks rise to the occasion?
The similarity of the current interest rate cycle for CD rates to that of 2003-2007 suggests that banks may face a liquidity risk about a year after rates start rising.
As interest rates begin to rise, bankers trying to sell retail time deposits will face competitors deploying an array of new terms and options.
Although deposit rates traditionally lag in a rising rate cycle, the next cycle may be different, putting pressure on banks to improve their deposit pricing skills now.
After six years of extreme insensitivity to falling interest rates, deposits are becoming more price sensitive, suggesting that banks will soon need to pay higher rates.
To replicate the fast growth of nonbank providers, banks need to market payment services as features that can be added to any checking account rather than as part of existing accounts.
The Fed generally raises interest rates within 12 months after deposit rates cease declining and begin turning up; such a turning point appears to be in sight.
Customer data provides a treasure trove of information that banks can utilize to design new products.