Coronavirus deposit bonanza can spell trouble for banks
Flow-of-funds analysis can provide a clearer picture of evolving customer behaviors
Gaining an edge in the battle for deposits
The battle for deposits has become increasingly competitive for community financial institutions. Major retailers and tech companies such Apple, T-Mobile and Google are attempting to enter the financial services landscape, posing new threats to existing players. As a result, money that used to be stored in traditional bank accounts is now scattered across various channels that are Read More
Answer these ten questions to win the deposit growth game
If a “secret sauce” exists to improve bank performance, it’s likely via capturing and retaining low-cost deposits. Low-cost funds feed a strong net interest margin and allow lenders to maintain a strong discipline and avoid higher yielding, riskier transactions. So it was a surprise to hear a regional bank CEO recently (and confidently) state that because the Read More
Money in your bank: Grow your deposit base with innovative search strategy
As interest rates rise and financial institutions face mounting pressure to fund lending with a reasonable cost of capital, acquiring new core deposits and customers affordably is paramount. Against this backdrop online-only banks thrive, accounting for nearly 12 percent of all new primary banking relationships in the U.S. What’s more, BAI Banking Outlook findings show that more Read More
Growing up: How regional and local banks are boosting deposits
For years, community and regional banks tossed proverbial pebbles to gain deposits as Goliath-like megabanks rolled out massive marketing campaigns. But in 2018, and into the new year, the Davids of the banking world may now have better slingshots. Small- and mid-sized banks gained an opening to build deposits thanks to the Federal Reserve, which has throughout Read More
Fintech’s positives for delivering deposits
We’re not saying that customers these days are lazy. Really, we’re not. But maybe, just maybe, they’re feeling a little entitled. Okay. Maybe a lot entitled. But really, you can’t blame them. As with every other aspect in today’s “get-it-now” society, customers want their transactional lives easy as pie: not just any pie, mind you, but one Read More
From deposit competition to determined direction
Call it the slowwwwww squeeeeeeze: Competition for deposits has produced tremendous force—the kind steamroller drivers would envy—as big banks, fintechs and smaller banks feel the pressure to collect the money they badly need to fund loans. And as the Federal Reserve continues to raise interest rates, so rates on savings accounts and CDs have moved higher Read More
Winning beyond share of wallet: What’s your relationship value?
Bankers invest so much time and attention toward driving “share of wallet” (SoW) that many tend to treat it as the de facto metric for measuring return on investment (ROI) in digital technology. But this constitutes just part of the story. Banks often miss another piece that’s just as important—if not more. It happens before share of Read More
How companion deposit accounts attract the capital banks need
If timing is everything, then score one for depositors. The time is right for them to get what they’ve searched for: higher yields without commitment. “Whoa, hold on now,” bankers respond to such suggestions. Banks can’t throw around high yields for deposit accounts without getting something valuable in return. While that rings true, trying to tie up Read More
A core issue: Surgically replacing core banking platforms
The core banking system is the underlying system of record for credits and debits that maintains transactions, histories and balances. The core platform is both the map and the compass that link a bank’s operations, clients and correspondents together as they transact. When core banking systems were originally put in place, they were considered ideal for the Read More
Crisis in promotional deposit pricing
Price promotions long have been an important tool for deposit-gathering, both to meet long-term funding goals and to quickly acquire balances in special situations. While the deposit-rich environment of recent years has muted much of the need for deposit promotions, these campaigns are set to proliferate as banks seek funding to accelerate loan growth and begin to Read More
Navigating time deposit rate change features
With the market anticipating higher interest rates, banks may find it increasingly difficult to get customers to accept longer-term deposit accounts. One way to overcome this reluctance is by offering them rate change features in their account.However, as banks design these accounts, it is essential that all the variations are considered in order to avoid any unintended Read More
Faster funds availability for customers
It’s not a challenge that will dissipate anytime soon: banks’ never-ending efforts to balance security and convenience. If we focus in on convenience, it really boils down to consumers’ lifestyle needs and demands for banking services. Initially, we might think that their expectations are met with new, shiny self-service options and mobile app capabilities. But in reality, Read More
Deposit profitability as key to branch profitability
Deposit spreads have been the bane of banks in recent years but that could change if interest rates continue to rise. Here’s why bankers should pay more attention to their deposit balances going forward:In the summer of 2006, the Federal Reserve ended a two-year binge raising the Fed Funds Rate, which had soared from 1% to 5.25% Read More
Three essentials for bank-at-work programs
It goes without saying that retail banking has many moving parts and Bank-at-Work programs are no exception. From target strategy to sales protocols and from results tracking to offer fulfillment, successful program implementation requires that banks maintain a comprehensive structure around their Bank-at-Work initiatives.But within that program structure, three things stand out because without them you’ll just Read More
Managing exposure to deposit refinancing
Long-suffering time deposit account holders are hoping for better deals the next time their CDs mature. Bankers anticipate this and model their future interest expense by applying “beta” estimates at the time of deposit maturities in their modeling. “Beta” is the percentage of interest rate changes that must be passed on to the depositors to maintain funding Read More
How to keep more profitable deposits
Bankers throughout the country are increasingly focused on both attracting properly-priced funds and creating more practical, customer-centric ways to retain quality deposits. It’s no secret that retaining appropriately-priced deposits is a more cost-effective proposition than chasing new funding. Financial institutions have invested greatly in core infrastructure and are hungry for better strategies to most efficiently leverage the Read More
Adding time deposits to the strategic agenda
As the likelihood of the Fed raising interest rates looms ever larger, it’s time for banks to consider the strategic implications of their time deposit funding portfolios, commonly referred to as certificates of deposit (CDs). A typical bank will have between 10% and 40% of their balance sheet in time deposits. The magnitude of dollars spent annually Read More
Coping with the overdraft conundrum
What to do about overdraft (OD) fees, or the loss thereof? For banks with assets over $10 billion, service charge income on deposit accounts, with OD income being the largest component, fell by almost half between 2010 and 2013 and at a rate twice as fast as for smaller competitors. But it won’t stop here. After the Read More
Valid forecasting of deposit accounts
Deposit pricing is challenging because it involves making assumptions about tomorrow. If your assumptions about the future behavior of your competitors and consumers are false, you will be making a very costly decision today. To avoid this, you need to ensure that your deposit forecasting model is based on scientific and empirical principles that ensure reliable results. Read More