Consultative selling for long-term deposits

A typical community banker would have you believe that they have built great relationships with their customers. Then, these same bankers frequently express their frustration that it is impossible to sell properly-priced longer-term deposit accounts to those customers. When it comes to attracting long-term funding, many bankers now seem to believe the only effective way to secure Read More

By |2020-05-27T18:00:36-05:00March 20th, 2015|Comments Off on Consultative selling for long-term deposits

Results of deposit pricing game theory exercise

In a recent article for BAI Banking Strategies, I broached a theory that deposit rates start rising prior to an anticipated increase in the Fed funds rate because of our tendency to try to outdo the competition. To test the validity of this assumption, I asked readers to participate in an exercise in behavioral finance, requesting that Read More

By |2020-05-27T18:00:36-05:00March 11th, 2015|Comments Off on Results of deposit pricing game theory exercise

Time to raise minimum deposits

Ahead of any rise in interest rates, financial institutions continue to hunt for new revenue sources, first from retail fees and second by increasing minimum deposits on time accounts. It’s time to consider flipping those priorities and focusing on raising deposit minimums to make up for shortfalls in fee revenue. Industry-wide, fee income has been trending down, Read More

By |2020-05-27T18:00:37-05:00February 20th, 2015|Comments Off on Time to raise minimum deposits

Deposit pricing game theory for rising rates

Twice in the past twenty years we experienced a cycle of decrease and increase in the Fed funds rate. And in both cases, institutions started increasing their rates slowly and gradually a few months before the Fed actually started increasing the funds rate. The most recent event occurred in anticipation of the Fed funds rate that took Read More

By |2020-05-27T18:00:37-05:00February 2nd, 2015|Comments Off on Deposit pricing game theory for rising rates

Rewards-based checking for rising rates

The Federal Reserve has signaled that rising interest rates might be on the way, raising the risk that community banks’ margins will be squeezed in the future. Help is available, though, and it comes from a somewhat surprising source: high-yield, reward-based checking accounts. While many banks use certificates of deposit (CDs) to mitigate rate increases, that’s a Read More

By |2020-05-27T18:00:37-05:00January 27th, 2015|Comments Off on Rewards-based checking for rising rates

Loan Pricing Tools for Raising Deposits

Talk about an under-appreciated tool. Loan pricing apps are capable of inspiring a bank toward any number of strategies beyond setting decent loan rates: growing profit; improving credit risk management; encouraging fee income; migrating away from expensive products; and growing deposits! However, most banks don’t use loan pricing apps. Typically, they get thrown out after the no-win Read More

By |2020-05-27T18:00:39-05:00November 3rd, 2014|Comments Off on Loan Pricing Tools for Raising Deposits

Projection for Rising Interest Rates

Last January, we published in BAI Banking Strategies our estimates for deposit interest rates in 2014. Now that we’re three quarters into the year, it’s time to ask: How did we do? Let’s start with the big picture, the overall economy. We predicted, “From a macro perspective, we are likely to see gradual and sustained improvement in Read More

By |2020-05-27T18:00:39-05:00October 15th, 2014|Comments Off on Projection for Rising Interest Rates

No-Overdraft Fee Accounts, No Overdraft Problem

“Overdraft fees should not be ‘gotchas’ when people use their debit cards,” said Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), after the regulatory agency published its most recent report, “Data Point: Checking Account Overdraft.” The study states that most overdraft fees result from debit card purchases for amounts under $24 and are repaid within Read More

By |2020-05-27T18:00:40-05:00October 7th, 2014|Comments Off on No-Overdraft Fee Accounts, No Overdraft Problem

Tracking Trends in Deposit Pricing

Tracking trends in deposit pricing involves three fundamental principles, each of which provides an additional perspective for the analysis: Distinguishing between an event and a trend. A pricing event is a single occurrence of rate changes that may not repeat itself for a long period of time. Such an event may occur as a reaction to temporary Read More

By |2020-05-27T18:00:41-05:00August 27th, 2014|Comments Off on Tracking Trends in Deposit Pricing

Ten Likely Scenarios for Rising Deposit Rates

The question about rising deposit rates is not “if” but when and to what degree they will rise. The timing of the rise in rates is relatively easy to project because rates are dependent on economic conditions. From a macro perspective, we are likely to see gradual and sustained improvement in the economy in 2014, provided, of Read More

By |2020-05-27T18:00:45-05:00February 11th, 2014|Comments Off on Ten Likely Scenarios for Rising Deposit Rates