Competing in Banking is tough. We all have the same basic business model and regulations to comply with, and most capabilities we offer are “table stakes” in the eyes of consumers. Aside from your relationship management culture, custom product features, and short-lived technology advantages, most competitive differentiation is achieved through pricing.
Deposit pricing is a critical driver of successful depositor relationship management
Deposit pricing is particularly important because deposit services are the foundation of deep, ongoing relationships with your customers/members. Why? Because timely access to money is a basic need for survival. In today’s world, members/customers have to trust to who they give their money and that it will be available to them whenever they need it.
Your ability to attract, retain and grow depositor relationships is absolutely mission critical for every bank and credit union. And deposit pricing is a critically important driver of successful depositor relationship management.
In our 40+ years of experience in banking, we’ve learned that most credit unions and community banks struggle to assess and validate the effectiveness of their deposit pricing and deposit strategy. Here are the five main things you need to know to manage deposit pricing:
- How much deposit funding do we need and in what term structure?
- What are market demand signals telling us about consumer rate/liquidity preferences?
- If we change rates on product X what can we expect to happen in terms of new money growth, lost money attrition, and product cannibalization?
- How can we target our offers to control cannibalization costs?
- How effective were the decisions we implemented and what lessons were learned?
Three key elements of deposit pricing management
And that’s where we come in. We create the information base you need to manage deposit pricing effectively:
- React to deposit demand signals,
- Quantify the impact of product pricing decisions across your entire portfolio
- Target customers/members to control cannibalization costs
Plus we give you the expertise to guide you through the process and maintain it through our extensive Knowledge Transfer program.
Rates are rising. We haven’t seen this scenario in over 20 years. It’s time to get your deposit pricing right. Call us and we’ll show you how.