Many commercial-banking relationships that had been profitable are now under water, driven by sustained higher rate environment that has changed client behavior toward deposits and put continuing pressure on spreads. What to do? Â
Banks should start by optimizing their existing portfolio. That means identifying underpenetrated client segments where there are opportunities for cross-sell, and reviewing deposit and TM fee pricing to better align with the value exchange that the market and the relationship may demand.  Â
But to achieve profitable balance sheet growth that can be sustained, banks need to have the right mix of clients. Lending segments display structural differences in deposit and fee potential – C&I clients, for example, can produce 3.5x more deposit balances and 3.7x more fee income than CRE clients. And a client’s industry, whether cash-rich or lending-intensive, can reveal material differences in loan-to-deposits ratios (see chart). That’s according to data from Curinos’ Commercial Analyzer and BusinessIQ.Â
As a result, banks should review their go-to-market strategy, and adjust it if needed, based on industry sector, sales size and lending segmentations, while calibrating the strategy to the bank’s product capabilities. And equally importantly, banks should review banker goals and incentives to drive behavioral changes needed to implement the strategy.Â
There are material differences in deposit and fee potential
by type of business and by industry.​
Deposit and Fee Potential by Lending Type​
Loan-to-Deposit Ratio Variance by Industry​
![](https://curinos.com/wp-content/uploads/2024/07/1A-1.jpg)
![](https://curinos.com/wp-content/uploads/2024/07/1B-2-1024x868.jpg)
Source(s): Curinos Commercial Analyzer, Curinos BusinessIQ
Note(s): C&I / CRE clients defined as clients with at least 50% of their lending in the respective products​