Deposit Update: Nominal Growth In 2024 If Fed Can Cut

Earlier this year, Curinos estimated that retail deposits would be flat for branch banks in 2024, so many were no doubt encouraged to see Q1 deposit volumes up 1.5%.  

But most of that growth came in March, when the lion’s share of income tax refunds are paid out. In April, when those owing taxes had to pony up, the uptrend reversed – by the end of that month, the average YTD growth was down to 0.2% (see chart).  

Some good news: We now project nominal deposit growth in 2024 for most banks, assuming the Fed cuts rates later in the year. Traditional banks should see deposit gains of up to 2%, while direct banks could see increases of 6% to 12%.  

The mix of direct-bank deposit growth is now almost evenly divided between new accounts and funds added to existing accounts, so direct growth may be seeing some signs of maturing. In 2025, we see a narrowing growth gap between traditional and direct banks.