When Santander Bank said recently that it will launch an online money market account next year, the announcement raised a natural question: Is it too late to the game?
When asked if the online deposit marketplace has become saturated, several industry observers contacted for this story said the window is still open provided banks price and market those offerings intelligently. But there is a real danger in waiting too much longer.
“Absolutely there is a first-mover advantage,” said Adam Stockton, a director in the consumer pricing practice at Novantas. “It’s easier to grow in a less crowded market. Marketing has gotten more expensive, and it’s gotten more difficult to get customers to notice you. The rate competition is very intense. The rate you have to pay is more expensive.”
Yet it is still an important investment to make as a bank, he said. While consumers largely are not ready to totally give up branch access, Stockton said his research and analysis found that digital factors are now at least as important as physical locations. Much of the industry is currently in an “awkward middle ground,” having to balance investment in digital channels with the overhead costs of branches, he said.
“In the short term, that means online deposit gathering has become really critical for banks looking to grow deposits at above market rates,” Stockton said.