With past rate cycles as a guide, Curinos believes deposit rates will continue to increase modestly this year for some segments even as the Fed gradually winds down its benchmark interest rate. The intensity of rate-seeking behavior has declined from peak levels, but Curinos data show continued rotation from lower-rate and back-book checking and savings deposits into high-rate savings, MMDA and CDs.
Even in this higher-for-longer environment, close to half of savings and MMDA deposits are still priced under 25 bp, so the impact of any repricing could be highly significant (see chart). And deposits that run off, regardless of whether to a higher rate or from natural attrition, need to be replaced at higher prevailing rates.
This runoff and repricing risk makes acquiring valuable customer relationships as important as ever, through targeting, personalization, customer-level treatments and total relationship solutions.
For more on mCOF trends, see my article “2024: Year of the Liquidity Manager” in the latest Curinos Review.
Average Consumer Savings Balance By Rate
Just under half of branch savings balances were under 25 bp in Q4, even as the percentage at 400+ bp continues to grow
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