Executives from Novantas swept into the annual meeting of the Consumer Bankers Association with a load of new research about deposits and savings behavior.
Executive Vice President Sherief Meleis kicked off the Novantas presence on March 31 when he provided highlights of new deposit research to the CBA board. The presentation drew on the findings of “The War for Deposits,” a joint study from Novantas and the CBA.
The study revealed that 60% of industry value comes from retail deposits, with most of it tied up in savings accounts. Of that, a surprising 44% is tied up in the savings back book. Another 28% lies in checking accounts and 18% is in CDs.
The research also debunks several myths surrounding deposits, including that younger consumers aren’t interested in CDs. The savings product has come back into favor with the recent rise in rates; the survey found that some 26% of the Gen Z population (ages 18-22) keeps some savings in CDs.
Executive Vice President Darryl Demos and Director Hank Israel kept the deposit conversation going on Monday, April 1, in “The Secret Weapon to Rate-Based Promotions.” The Novantas pair was joined by Joseph Lombardo, M&T Bank’s senior vice president for consumer strategy, customer experience and deposits, who said that the fierce competition for deposits is at the “forefront of our discussions” at the Buffalo, N.Y.-based bank.
“We think the competition for deposits is real and will continue for at least the next 18-24 months,” Israel said, noting that a slowdown in Fed rate hikes isn’t likely to ease the competitive landscape.
The trio also discussed the effectiveness of targeted customer scoring to help identify rate-sensitive deposit customers who may be at risk of leaving the bank.
“We can segment our portfolio in different ways and it has started to influence the way we treat customers,” Lombardo said.
Later that day, Meleis faced off against other executives in a fast-paced debate during the conference’s general session. The executives each received 60 seconds to defend their choice for “What’s the #1 decision your bank has to make NOW?” Meleis cited data from the new research to explain why deposits are the crucial issue. Other executives focused on topics like technology, people and cybersecurity.
The Novantas speaking agenda finished up on April 2 when Executive Vice President Andrew Frisbie was joined by executives from Bank of America, Ally and Webster for a panel called “Battle for Deposits: Struggles of the Rising-Rate Environment.” The session explored cyclical and secular contributions to the current landscape.
“Competition is eroding away a lot of the valuation that used to exist in deposits,” said Frisbie, who moderated the session. The executives spoke about how deposit behavior is increasingly being driven by enhanced digital capabilities that give customers the ability to easily move money between institutions.
They also addressed Novantas research that explored savings trends, saying they increasingly compete with fintechs that help consumers save and budget.
“Customers want to be financially healthy and we have a role to play,” said Nitin Mhatre, an executive vice president and head of community banking at Webster.
Director, New York