From It’s Go Time for Commercial Banking: Are You Ready?, a webinar presented by Curinos on February 25 & 26, 2025, that featured Margarita Vacanti, SVP, Commercial Banking and managing directors Peter Serene and Bob Warnock.
After several years of challenges, the commercial sector is poised for growth, thanks to what appears to be an increasingly favorable economic and regulatory environment. But many challenges persist, including the growth of private credit and the continuing increase in interest-bearing balances in the deposit mix.
In this webinar, our panelists tackled the central question of where commercial bankers should be looking for growth in the coming year and how to capitalize on it. Here are some of the key takeaways:
1. Commercial deposits can be an efficient source of funding.
Even though commercial deposits have a reputation of being expensive, so far in the falling phase of this rate cycle, they’ve passed through nearly as much beta as Wealth deposits and considerably more than both Consumer and Small Business. In addition, their portfolio rates are significantly less than those of both Wealth and direct banks. Discipline in winning core operating relationships and pricing them effectively is a requirement to growing more quickly and profitably than the competition.
Disciplined Rate Management:
Banks have demonstrated discipline, so portfolio rates are coming down, but cost of acquisition remains high.
Falling Rate Deposit Beta | Current Cycle1
Source(s): Curinos Deposit Analyzer
Note(s): 1) Current cycle defined as Aug – Dec ’24 (100-bp cut)
2. Owning the core relationship can have a big impact on deposits.
The ability to gather deposits from the lending relationship can be significant. For every $1 billion of loans outstanding, the difference in deposit generation between banks in the bottom quartile and median performance can be as much as $110 million. Success in securing that all-important operating cash is closely tied to three factors: primacy, the relationship managers’ incentive structure, and further shifting the focus of the value equation onto competitive liquidity products.
Focus on Mix:
Pricing discipline is key as banks work to generate more deposits from lending relationships through Primacy, RM incentives and competitive products.
Source: Curinos analysis, Commercial Analyzer Executive Summary
3. Owning the core relationship can also have a big impact on treasury management fees.
Here, deft execution can add as much $800k in fees for every $1 billion of loan volume. Again, success starts with winning the relationships that have sufficient volume and activity, then exercising discipline in cross-selling. As the product set and competitive landscape evolve, correct pricing is essential—aggressive enough to receive fair value for services rendered but not to the point that clients are tempted to shop the relationship.
Focus on Mix:
Increasing Primacy from deepening relationships and winning more NTB primary relationships is the key lever for long-term remixing and growth.
Source: Commercial Analyzer Executive Summary
4. Banks that use data with discipline through rate cycles outperform their peers.
The successful banks are actively using insights about the industry to temper their activities in the field—for example, what rates are really being offered so they don’t need to move to the top. Discipline around repricing their existing portfolio can lead to a material advantage in how they perform. The 54-basis point spread between the top quartile and benchmark portfolio rates translates to $5.4 million in annual interest expense saved for every $1 billion in commercial deposits.
Disciplined Pricing:
Top quartile banks achieved above-average annual balance growth while achieving outperformance on portfolio interest rates.
Note(s): 1Annual interest expense saved calculated as an average of cumulative expense saved over ~3-year time horizon; All Banks benchmark excludes top quartile banks
Source(s): Curinos Commercial Analyzer
5. Successful commercial banks surround the client with experts rather than relying on the RM to bring them in episodically.
The traditional operating model has the relationship manager as the principal point of contact. But that can lead to the RM becoming a gatekeeping and keeping the other experts at arm’s length. And that can impede the effective delivery of valued services and the speed to which a client may be looking to expand their business. At any given time, clients may need ready access to a treasury management officer, capital markets expertise or wealth management to maximize enterprise, and even personal, value.
Salesforce Effectiveness:
Clients want their bank to partner with them to grow their business faster, run the business better and maximize enterprise value.
