Mass affluent customers are desirable. They have steady incomes and larger deposits, and they can be cross-sold into other profitable services such as lending and wealth management. But in today’s high rate environment, these more sophisticated clients are also demanding significantly more on rate than their mass market counterparts, so holding on to them is more costly than in the past.
Curinos’ Retail Deposit Analyzer shows the rate progression. At most banks, the mass market are the 80% of customers who hold balances of less than $25k but only 13% of deposit balances overall. On average, they’re paid an overall weighted rate of 51 bp. In the $25-100K customer tier, that rate more than doubles, to 120 bp.
Meanwhile, the 2% of customers who hold balances over $250K, and 34% of all deposits, earn 263 bp as an overall weighted rate – more than 5x higher than the mass market. It’s the widest the gap in more than a decade, and it’s likely to widen even more because these wealthiest customers are no longer content to park high deposit volumes in no-rate checking accounts as they did during the Covid era of zero rates.
The upshot? FIs looking to acquire more mass affluent consumers in the near term will need to be prepared for increasingly higher deposit costs.
Deposit Cost by Balance Tier | Traditional Banks | April ‘24
The most affluent deposit holders earn 5x the rate of the mass market.
