To Maximize CD Retention at the Right Price, Look to Segmentation

Nearly $2 trillion of CDs will mature this year. How FIs manage those maturities could mean hundreds of millions in value gained or lost. One of the most effective ways to be on the right side of the equation is to understand maturing CD holders by segment and leverage that into the pricing and offer strategy to move the needle. The longer and deeper the relationship, for example, the greater the retention.     

Based on data from the Curinos Retail Deposit Analyzer and our perspectives from working across the industry, CD retention can vary 70% to 94% based on whether or not the customer is renewing for the first time, their depth of relationship and the FI’s rate competitiveness (see chart). That’s a difference of up to $24 million in CD volume retained for every $100 million in maturities. Assuming an average spread of 50 bp on CDs, strategies that increase retention by 500 bp would generate $24k in incremental value.   

Segmentation leveraging price, product and duration can be calibrated to optimize cost and rate to eke out better customer retention and economic value. Realizing that value also requires not only access to data and benchmarking but also the analytical capabilities and operational nimbleness to execute.