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Growing Deposits Is Getting More Expensive Across The Board

The price for new deposits keeps climbing for banking institutions – especially for those dependent on consumer accounts – as high interest rates and pitched competition continue to reprice back books across the industry. We expect this trend to continue well into 2024. 

The latest numbers from the Curinos Deposit Analyzers show the average marginal cost of funds (mCOF) for new consumer deposits exceeding 11% at the end of 2023 (see chart), up nearly a full percentage point from two months earlier. Wealth mCOF saw an even sharper spike, while the average cost for small business and commercial deposits each rose roughly 20 basis points between October and December. 

At these mCOFs, a bank and credit union needs a well-thought-out reason for wanting to grow expensive deposits, and those moving forward need an innovative, data-driven deposit pricing strategy so they don’t pay any more than they have to.    

For more on mCOF trends, see my article “Deposits in 2024: It’s Gonna Cost You” in the latest Curinos Review. 

12-Month Marginal Cost of Funds by Business Line​

Consumer mCOF rose close to 100 bp between October and December​ in the face of aggressive competition for deposits and back-book repricing

Source(s): Curinos Retail Deposit Analyzer, Jan ‘23 | Note(s): 12-month mCOF calculated from deposits acquired from Jan ‘23 – Dec ‘23

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  • Author
    • Pete Gilchrist

      Pete leads the Markets Division within Curinos, focusing on Consumer, Small Business, Wealth, Home Lending, Commercial, and Balance Sheet Management. In this capacity, he oversees the company’s expertise across Pricing, Profitability Optimization, M&A, and Regulatory Affairs. ​ Pete encourages clients to embrace customer solution centric thinking throughout their sales, business, and central functions so that banks can advance the fair value exchanges between themselves and their clients. He believes that this is the path toward an increasingly safe, sound, and profitable banking system. Under his guidance, the Company has expanded its position as the go-to solutions expert for customer behavioral data, analytics and expertise, increasingly driven by artificial intelligence. ​ ​Prior to Curinos, Pete was a Board member and Co-Head of Global Advisory for Novantas, and the Head of Risk Management at First Manhattan Consulting Group. He formerly taught Calculus-as-a-Second-Language to aspiring non-mathematicians at Harvard.

      View all posts Executive Vice President​
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