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.
For a long time during the current rate cycle, the continued expectation of rising betas was akin to the “Boy Who Cried Wolf.”
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.
Customer who seek a higher rate put the bank in a defensive position that often ends with the bank offering a rate that is above the optimal and fair price for that client’s deposit.
After a week away this summer, my husband and I came home to an overstuffed mailbox that contained no fewer than seven offers from banks that were vying for our checking business with rich offers worth hundreds of dollars. We tossed every last one of them in the circular file.
So you think you should launch a direct bank? After all, it could be a great way to scoop up deposits across the country at a time when most banks are struggling to acquire new customers and hang onto the ones they have.
The industry-wide scramble for deposits makes it all too clear that surgical pricing is the wave of the future.