As we enter 2019, we believe that the industry faces a new set of challenges and opportunities. We have been through two different stages of the economic recovery since the financial crisis: a period of low rates, followed by initial rate increases that benefited assets and allowed deposit rates to lag. Now we are in a third stage in which deposit betas exceed loan betas.
The banking industry appears to be in a good place as we head into 2019. The economy is strong, regulatory pressures have eased, credit losses are low and consumer confidence is high.
Don’t be so quick to close that branch.
The 2018 report reveals a perfect storm of factors that traditional brick-and-mortar banks must navigate in order to stay competitive over the next decade.
Regulators are paying more attention to deposit rates, highlighting the importance for banks to conduct a deep analysis of their portfolios so they can justify their pricing strategies.
U.S. corporate treasurers have been slow to move company cash into high-yielding accounts even as the Federal Reserve has raised rates eight times in the past three years.
The entrepreneurial spirit is alive and well in the U.S. and Canada — and it looks younger and more diverse than ever.
The Fed’s move to raise its target interest rate to a range of 2.00% – 2.25% comes at a time when banks are already grappling with rising deposit costs.
This issue focuses heavily on deposits and for good reason: they are top of mind. Bankers are trying to figure out how to acquire new deposits without wrecking the financials. Quarterly earnings reports show that the biggest banks are scooping up deposit market share. And customers are lamenting the paltry interest rates they are getting from their longtime banks, prompting many to seek higher rates from local competitors, national players and new entrants, like direct banks.
Long one of the most under-appreciated and least understood categories for banks, the role of the savings accounts may be on the brink of change due to the industry’s widespread disruption from technology.