With rates expected to stay higher for longer, balance rotation from non-interest-bearing (NIB) to interest-bearing products is keeping pressure on bank interest expense and net interest margin. But beneath the aggregate trend lurks meaningful behavioral differences between client segments.
According to Curinos’ Commercial Analyzer, clients with material treasury management (TM) relationships exhibit significantly higher levels of NIB balances (43%) than non-TM clients (11%), a much lower portfolio cost of funds (1.98% vs. 3.46%, respectively) and higher fee-based revenue. Taken together, it adds up to better economics for the bank.
Winning the operating relationship is key to achieving sustainable, profitable growth in today’s margin-tightening environment. To chalk up that win, banks need to take a holistic approach that includes evaluating cross-sell and upsell opportunities within the existing portfolio, and aligning priorities to ensure accountability within the organization.
A primary TM-led relationship is key to growing stable, low-cost operating deposits.
Note: “Primary Clients” defined as clients with more than $12K in annual TM Revenue
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