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Retail Deposits: Stable, But More Competition Possible

This Month in Retail Banking

Amid a month of market disruption during which wealth and commercial deposits saw material outflows post-Silicon Valley Bank (SVB), retail deposits remained remarkably stable and largely on a consistent trajectory. In the two weeks immediately following SVB’s failure, wealth deposits declined nearly 3% and commercial deposits declined nearly 2% above YTD trajectory while consumer deposits remained flat overall and within 0.5% of their YTD trajectory. Digging deeper, we see that customers with high balances – above the $250k insurance limit – saw modestly higher outflows, but these were offset by inflows among smaller-dollar deposits, as consumers in some cases diversified among banks. 

From the perspective of consumer deposits, four factors over the last month characterized winners: 

Strong Primary Checking

Checking-anchored relationships continued to be more stable than single-service customers at all balance tiers.

“Perceived Stability”

Longstanding and high-density presence in a local market drove customer perceptions of bank stability.

Higher Rates

For customers diversifying across banks and moving large – but insured – chunks of deposits, return mattered in many cases.

Marketing Speed and Flexibility

Getting the right messages and offers to customers quickly was more likely to make the three other success factors possible.

As we look ahead, the value of retail deposits – particularly those anchored by a checking relationship – has never been higher. That value, however, may very well come with a cost in the form of increased competition, as more banks look to defend and grow in a market where there are many attackers. Standing out and winning fair share in an expenseconstrained environment will be more important than ever. 

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