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Steve Klinkerman
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Sherief Meleis Featured at BAI's Retail Delivery Conference, Speaks on Deposit Strategy
November 14, 2005
ORLANDO, FL - Retail banking companies need to revise their deposit-gathering strategies or risk losing significant balances as interest rates rise, Sherief Meleis today told attendees at BAI's Retail Delivery Conference & Expo, the largest meeting of its kind in the retail financial services industry.
A managing director at Novantas LLC, Meleis was a featured speaker on the topic of "New Deposit Strategies for a Rising Rate Environment." He explored the issues surrounding a changing interest rate environment and made recommendations on how to retain valuable core deposits as competition intensifies.
"Depositor behaviors will change as rates rise, tilting balances toward the least profitable deposit products or even out of the bank," he said. To cope with these pressures, he said, banks should revise marketing strategies and product designs for money market deposit accounts and certificates of deposit, and they should improve their ability to leverage customer relationships initiated via free checking.
Rather than raise rates across the board, Meleis said, banks should create targeted offers for the most rate-sensitive customers, backed by selective marketing campaigns. Standard offers can carry more conservative rates and still amply satisfy the large base of customers who value non-price factors such as convenience, service and safety. Negotiated offers, by contrast, are for customers more strictly interested in price. These insights apply both to MMDAs and to CDs.
With free checking, Meleis said, the challenge is to strengthen customer interactions and relationships so that unit growth in account numbers better translates into balance growth. "The game is won or lost during the onboarding process," he said, explaining that the best time to cross-sell is at the onset of new relationships.
Novantas is the acknowledged leader in customer science and revenue strategy for the financial industries. The Firm specializes in applying advanced analytics and technologies to help clients make better decisions in marketing, product, pricing, customer management, and distribution.