Correspondent Blog

It is not every day that you get to own a portion of a banking vendor without putting capital in upfront. ModernFi, a company that provides reciprocal deposits providing access to insurance through network banks (subject to certain conditions) and competitor to legacy deposit networks, is in the process of building a bank-owned consortium to…

Every bank has some percentage of deposits that they “hand” or bespoke price. Exception pricing occurs when a rate sensitive customer requires a higher rate to maintain or grow their deposit balances at the bank. Deposit exception pricing is both an art and a science and, in this article, we discuss five tactics that will…

You set deposit pricing targets, and invariably, you must deal with customers (and bankers) who want to exceed those targets. While this primarily occurs in certificates of deposit and money market accounts, it also occurs in savings accounts, analyzed transaction accounts, and interest-bearing transaction accounts. The question is – when do you grant an exception,…

In the quest for deposits, one successful tactic at top-performing banks is to target the right types of customers. While desiring to bank everyone in your community is noble, it can be a poor use of resources. Some customers offer better returns because they use more banking services and have more deposit balances. Not to…

It is a long held notion in banking that you only move deposit rates when the Federal Reserve moves rates. However, if you think about this practice, it doesn’t make much sense in terms of a bank’s profitability. Markets are dynamic. Interest rates, and funding costs, move independently from the Fed.  In this article, we…

The banking industry’s cost of funding earning assets (COF) is highly correlated to short-term interest rates. The Federal Reserve lowered short-term rates by 100bps in late 2024, with expectations of additional rate cuts in 2025. On average, community banks have not been able to lower their COF, now recognize the reality of a pause by…

Take a second to think about how much of your operating, sales and marketing effort is spent acquiring new customers versus growing your existing customers. If you are like most banks, 80% of your effort is not directed at increasing product usage. This could be a problem because when you look at conversion rates for…

You oversee pricing your checking accounts and you are trying to decide between $10.00 per month, $9.99, or $9.95. Which one do you choose? In a prior article where we tested “charm” account pricing, where we showed that conversion rates were almost twice as high when we used a $1.99 price point for a product…

As a general statement, banks offer too many options for certificates of deposits (CDs). Consider that the average bank offers 12 different maturities, some “specials,” plus several different tiers of pricing within each maturity. We have seen banks with as many as 42 different CD options which is inefficient for every party. The problem is…

Something might be getting lost in the tribal knowledge of managing time deposits. Certificate of deposit (CD) “specials” and the odd-month CD offering are good examples. As the legacy knowledge of deposit gathering is passed down from generation to generation of banker, some of the finer points of liability structuring are getting diluted with some…

Should the Federal Reserve move their target Fed Funds rate down later this year, many bankers will immediately match the move and drop their deposit rates. While counterintuitive, this may be the exact wrong move if you want to optimize long-term bank profitability. This article explores deposit management tactics in a falling rate environment that…

There have been many a banker who has said they want to offer a high-yield account because the “higher interest expense is just like paying marketing costs.” This banker may even be thinking of starting a completely new digital bank using a high-yield account as its flagship product. The logic that “rate sells itself” is…