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Banks prepping ahead of ‘giant sucking sound’ of deposit shift

As the prospect of rising rates looms, banks are increasingly focused on building “sticky” consumer deposits.

From a liquidity standpoint, consumer deposits are among the stickiest, most valuable deposits a bank can gather and are the least likely to run off in a crisis, said Sherief Meleis, managing director at bank analytics and advisory firm Novantas Inc. Institutions often grow retail consumers through the modest primary checking account, often called a demand deposit account or noninterest- or interest-checking account.

“All good things flow out of that primary checking,” Meleis said. “It gives you the right to cross-sell, so banks are very focused on getting that primary checking account.”

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