Is your bank ready for the coming rate rush?
Deposit pricing was never just a mere financial maneuver for financial institutions. But as banks seek to control historic levels of interest expense, their depositors will decide en masse where their savings land before rates recede any further. Here's why banking executives must decide now how serious they are about serving savers and why pricing is no longer just about controlling the cost of funds.
It’s the final call for deposits at more than 4.75%. The Federal Reserve’s 50 basis point rate drop means happy hour on the highest interest rates in more than 15 years is nearly over. Every banking executive should consider now how deposit pricing will affect the organization’s brand.
Pricing is no longer just a financial decision for banks; it now communicates how a brand thought about retail depositors last year and the role it wants in savers’ financial lives in the future.
Here’s why:
When interest rates were trivial, all banks treated all depositors the same—rates were essentially at zero. For depositors, that meant returns came from taking risk in the stock market. They could also protect savings in deposit products but receive a historic-low rate. In 2022, bank deposits became a viable third option as rising rates created returns from products providing FDIC-insured safety.
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