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
Banks are investing in new technology to create omnichannel experiences for their customer but success has been limited. Why? For one thing, bankers overlook these wise words from Steve Jobs, the founder of Apple: “You’ve got to start with the customer experience and work back toward the technology – not the other way around.” In other words, Read More
Consumers have embraced their mobile devices to check balances, make payments and conduct other financial activities, giving marketers the ability to reach them more easily. But, to take advantage of this access, bank marketers need tools that create a personalized experience and anticipate customers’ needs in real-time. Financial institutions able to deliver a tailored experience with optimal Read More
Financial institutions are primarily focused on meeting the needs of Americans that fit into certain demographics. The rest of the population ends up as the underbanked – consumers with needs viewed as too costly, too risky or too difficult to serve. According to the FDIC, the collective population of underbanked Americans is approximately 34.4 million households, more Read More
There have been two significant pieces of recent regulatory guidance that will directly impact the overall administration of your institution’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. While these two regulations may seem, at first glance, to be unrelated, a more comprehensive review will reveal that they are very much tied together. As technology has changed, so Read More
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
In the wake of the popularity of the American Sniper movie, it might be helpful for bankers to think of product development in terms of some key lessons learned from special operations warfare. Consider these key six tactics typically utilized by special operations teams: Purpose. Each mission has a purpose that the entire team understands. Does everyone Read More
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
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
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
