Operations

Deposits: The value of volume

No matter the market, a bank today likely has competitors offering 5.5 percent on a certificate of deposit. With competitors pushing the pricing envelope, leaders certainly may wonder: Will high cost of funds become a threat to return on assets? [Continue]

How term deposits can reclaim their crown

If bankers could choose a funding portfolio made up of deposits committed for a time, or deposits that could leave at any time, they’d choose the former. But, looking at the industry’s deposit composition during the last 30 years, it appears just the opposite. If our asset-liability logic says banks would generally prefer term deposits, what dethroned the CD? Bankers already know the common answers: Interest rates and/or depositor preference. [Continue]

What Section 1071 means for banks

The Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act has made waves in the banking industry since its announcement in late March.  [Continue]

A case for raising the deposit insurance cap

In an April roundtable hosted by The Brookings Institution, Prasad Krishnamurthy, professor of law at the University of California, Berkeley, said the Federal Reserve should consider extending its deposit insurance cap far beyond what it is now. [Continue]

Oversized deposit spreads aren’t compensating for undersized volumes

Executives who focus single-mindedly on cost of funds have missed the exit ramp, and it does not bode well for their organizations. With some art and some science, banks can de-commoditize deposits by segmenting deposit offers in more robust and differentiated ways than those deployed decades ago. Improved sales processes — and training for frontline staff that has not been imperative since 2009 —  can differentiate a bank and bring in profitable funding, though higher-priced, without the detrimental impact of repricing the entire book with across-the-board rate increases. [Continue]

Tech lessons from a financial crisis

It might be easy to say, “That was a big bank, and we’re community banks. We’re different.” And while that’s true, there are certainly some aspects of the SVB failure that apply to banking across the board. [Continue]