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As rates climbed and remained high throughout most of last year, many banks were able to increase deposits penetration with their wealth clients by offering attractively priced CDs and exception pricing on savings/MMS. But this led to a high number of wealth deposits clients who had just one deposit product. And once the Fed started cutting rates, holding on to those rate-sensitive balances, and the relationship that appeared to come with them, became more difficult.
But some firms were better than others at retaining those relationships. How? By capturing the everyday banking relationship via a checking product in addition to the rate-based savings/MMS or CD adoption.
Of those clients who adopted savings or CD products that weren’t anchored to a checking product, only 78% of them had any deposits relationship after 18 months. But of those who had a combination of checking and a more rate-based product, 90% of them were still on the books. And this gap has been shown to persist and grow over time. After 48 months, client-level deposits retention was 74% for the clients with checking versus only 52% for those without (see chart).
With rate cuts a near certainty in the near future, the evidence is clear: To increase deposits penetration, it will be increasingly important for firms to focus on primary banking relationships, led by checking, rather than on the short-term benefit of simply capturing less sticky rate-chasing deposits.
Total Wealth Client Retention by Relationship | Rolling 3-Month Average
Source(s): Curinos Analysis, Curinos Deposit Optimizer, Curinos Wealth Deposit Analyzer | Note(s): Simple averages displayed | Page displays all data available at time of production and bank consortium may differ from that of Wealth Deposit Analyzer tool
