The 4 steps to build PFI status

A healthy deposit inflow is the foundation of financial institutions. It provides the funding that financial institutions need to make loans, invest in securities, and provide other financial services. Without it, financial institutions can face declining liquidity and an eroding capital base, not to mention reputational damage, which exacerbates the problem by making it difficult to attract new deposits.

Recent news showcasing this play out publicly, combined with a rising rate environment, has brought deposit health into the spotlight, becoming a growing concern for financial institutions and their teams. This has left many to develop new programs to stop deposit outflows and win share-of-wallet from their competitors.

A recent article by The Financial Brand points out that while paying more for deposits via higher rates and sign-up bonuses may be necessary in the short term, there is a lower-cost play that will reap longer-lasting benefits: focus on making deposits and account holder relationships stickier.

“[Deposit] stability is going to hinge not on continually giving customers more interest, but on making it attractive for them to centralize more business with your institution.” – Steve Cocheo, senior executive editor at The Financial Brand

 

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