Winning the Battle For Deposits Webinar
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Winning the Battle For DepositsWebinar
MIKA MOSERBank Director
Hosted by:
SCOTT HILDENBRANDSandler O’Neill + Partners
STEVE KINNERPromontory Interfinancial Network
Featuring:
MATT PIENIAZEKDarling Consulting Group
DAVE KOCHFARIN
JACK MILLIGANBank Director
Moderated by:
STEVE KINNERPromontory Interfinancial Network
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Winning the Battle for Deposits
Questions? Type your question in the box on the right side of your screen!
Maximize the audio box to see who is speaking.
This webinar is being recorded and will be made available at www.promnetwork.com/other/events/webinars/on-demand-webinars
The opinions expressed in this webinar are those of the individual speaker only and do not necessarily reflect the opinions of the other speakers or of the entities with which the speakers are associated.
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Housekeeping Items
Deposit Competition Is Starting to Ramp Up
5%
S&P Global Market Intelligence, March 14, 2018
S&P Global Market Intelligence, March 14, 2018
Wall Street Journal, March 19, 2018
American Banker, March 20, 2018
Wall Street Journal, March 22, 2018
U.S. Banks in “arms race” for deposits as rates riseFinancial Times, March 22, 2018
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Large Banks Are Investing Billions in Branding and Technology to Attract Deposits
Source: S&P Global Intelligence.
Aggressive retail deposit promotions have begun.
Data for eight banks >$200bn in total assets that disclose marketing expenses. $83
$219
$226
$439
$588
$1,313
$1,447
$2,156
HSBC BANK USA, N.A.
SUNTRUST BANK
PNC BANK, N.A.
U.S. BANK N.A.
WELLS FARGO BANK, N.A.
CAPITAL ONE BANK (USA), N.A.
BANK OF AMERICA, N.A.
CHASE BANK USA, N.A.
FY2017 Advertising & Marketing Expenses (Millions)
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As Rates Start to Rise, the Deposit Mix Is Starting to Shift
Sources: Federal Reserve Bank of St. Louis. S&P Global Market Intelligence. Data through Q4 2017.
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Perc
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Funding Mix as a % of Total Assets, U.S. Banks <$100bnQ1 1990 – Q4 2017
Non-Maturity Deposits
Time Deposits
Effective Fed Fund Rate
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• Market drives deposit pricing—the Federal Reserve is just one factor:– Banks are raising capital and looking to grow– Mergers and acquisitions: Core Deposit premiums on the rise– Follow your top ten competitors: Loans/ Deposits, Securities/ Assets, etc.
• Strategies being utilized:– Pre-crisis CD specials: Same impact today?– Deliver products that your clients want (ex. MMDA deposits linked to Fed Funds)
• What needs to be explored?– Wholesale Funding: If and when it should be utilized– Investment Portfolio: Liquid and predictable cash-flows– New hedge accounting simplifications: Will change the competitive landscape
How to Manage Funding Pressure
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© 2018 Darling Consulting Group, Inc.
“Winning” the Battle for Deposits…
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© 2018 Darling Consulting Group, Inc.
Cost of Funds Management Truly Important?
Develop Clear Offensive & Defensive Deposit Strategies…They Differ Greatly
Adjust Tiered Products to Reflect Realities of Current Account Balance Distribution
Have Ready-to-Go Shelf Products (MMDA, MMS, CDs)
Lay Out Very Specific Strategies for Each of your “Largest” Accounts/Relationships
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© 2018 Darling Consulting Group, Inc.
Cost of Funds Management Truly Important?
Get Compliance & Operations In Sync With Your Deposit Strategy Needs
Don’t Become So Fixated On Rising Rates, that Forget About Greatest Risk For Most Banks…Declining Rates
Identify Plausible Strategies For the Role & Use of Wholesale Funding (reciprocal, brokered, borrowings)
Take Deeper Dives Into Your Deposit Data…Don’t Underestimate Its Value In Developing “Winning Strategies”
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© 2018
Every Battle Needs a Plan, Not Rube Goldberg!
Winning the funding competition at your institution, one battle at a time!
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© 2018
The funding conflict is fought on two frontsExisting Deposits
Managing average cost increaseMaintaining fundingDetermining effective duration
Growing New Funding
Managing incremental (marginal cost of growthDeveloping and acquiring new customer accounts and balances
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© 2018
Battle Strategy Vs. Tactics - Deposit AcquisitionCost management is critical to earnings, but what’s your long-term plan?
• What are our risks to maintaining\growing each sector?• What is our contingency plan for unforeseen events?• What are the most critical things we get right?
How do we monitor battles on both short & long term front?
Do we have the right products to wage the battle?
Who we are engaging, and do we know how best to engage?
Do we have enough data to,
• How past trends have influenced where we are today?• Develop a reasonable prediction of potential results?• Really use the data to determine how well we are waging the battle?
Is the time right to strike?
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© 2018
Strategy ConsiderationsProduct Design• Ensure you have the right plan for the
right market
Define market segment we are soliciting• Millennials, wealth banking, college
students?• What are the right features\message to
meet this market’s expectation?
Risk\reward:• Comparing current penetration to market
opportunity• Do we have the right “intelligence” to
attack or defend effectively?• Are future funds as “stable” and “core”
sources as historical deposits?
Keys to spark this segment to commit• How do we reach them? Internet
advertising, direct mail, personal invitation?
• Spend money on the “weapons” to achieve goals!
Define realistic timeframes• Make commitments of resources
to get the job done• Sets real timeline and metrics for
success
Keep the mission focused• Ensure proper barriers to control
cannibalization?
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© 2018
WHAT DOES LONG-TERM FUNDING SUCCESS LOOK LIKE IN TODAY’S ENVIRONMENT?
Define it, Implement it, Measure it, Refine it
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MIKA MOSERBank Director
Hosted by:
SCOTT HILDENBRANDSandler O’Neill + Partners
STEVE KINNERPromontory Interfinancial Network
Featuring:
MATT PIENIAZEKDarling Consulting Group
DAVE KOCHFARIN
JACK MILLIGANBank Director
Moderated by:
STEVE KINNERPromontory Interfinancial Network
16
Winning the Battle for Deposits
Submit your questions in the box to the right of your screen.
Q&A Session
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Winning the Battle For DepositsWebinar
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