Peapack Gladstone Bank embarked on a plan to enhance their Wealth Management clients’ online experience. The current state required customers to log in to multiple systems to access their account information – Bottomline for their wealth accounts and Banno for their bank accounts. There was no ability to present these clients with an aggregated view of all their accounts.

Download the whitepaper to learn more about how PGB solved this issue and maintained its reputation for its distinguished white-glove service.

Click to download: IgniteConnex Banno Integration: Peapack Gladstone Bank

Veritex Community Bank embarked on an ambitious digital transformation initiative to revolutionize its consumer and commercial onboarding procedures. However, the bank faced a multifaceted problem: how to seamlessly integrate its various systems to enhance processes, comply with regulations, and eliminate cumbersome manual tasks.

Download the whitepaper to learn how Veritex Community Bank connected its Digital Account Opening Solution to other digital transformation systems and its banking core.

Click to download: Veritex Community Bank Whitepaper

The banking industry is rapidly changing, and it is easier than ever to get left behind as your competition quickly adapts to new digital trends. The way customers have chosen to deposit their money has shifted over the past several years. Customers aim to open fewer bank accounts with the goal of leaving money untouched to accrue interest. More and more customers are opening low-maintenance checking accounts used for transaction purposes and changing the demand for deposit pricing and sales based on interest rates.

As the federal funds rate has increased in recent months, banks and lenders are keeping an eye on their deposit strategies for the new year to maximize their deposits strategy.

How is your bank incentivizing deposits?

Deposits are a vital revenue stream for your bank, and transactional accounts offer little incentive for your customers to leave their money with your financial institution instead of spending it elsewhere.

A successful bank management strategy should entice customers to deposit more than they withdraw, which remains highly dependent on your deposit pricing and sales strategies in times of fluctuating rates.

What Do Treasury Yields Have to Do with It?

Let’s go back to the basics! Treasury yields are directly related to the interest rate banks may charge on loans, where banks can pay and accrue interest. Customers can either open interest-bearing accounts or non-interest-bearing accounts. Interest-bearing accounts may require a minimum deposit or charge penalties if too many withdrawals are made.

Non-interest-bearing accounts usually come with fewer restrictions, but customers also don’t earn anything back. Customers with non-interest-bearing accounts may also face fees or penalties for overdrawing their accounts, using an ATM, or purchasing cheques.

As you know, the money deposited in banks doesn’t just sit in a vault untouched. Although banks are required to keep enough cash on hand for fulfilling withdrawals, they also make investments with the money customers have deposited. One such investment is loaning money to other customers through mortgages, student loans, business loans, and more. Customers then repay the loan with interest—meaning the bank gets paid more than it gave out.

While banks usually set a fixed, low rate on the interest your account can earn, oftentimes economic factors will switch their strategy. The treasury yield curve inversion this year has led to some uncertainty around deposit and sale strategies in 2023.

With the federal funds rate set at its highest since the 1980s—meaning the interest you can charge on loans is even higher, consumers are disincentivized toward long-term investments. New deposit pricing and sales strategies can help adjust to the current economic climate and help customers choose to leave their money with your institution.

Deposit Pricing and Bank Profits

Banks make a profit by charging more interest on loans than they offer in interest on savings accounts. However, to have enough capital to issue loans, banks need their customers to deposit more than they withdraw. The fewer deposits banks have on hand, the fewer loans they can give out.

Deposit pricing is setting the rate for interest earned on savings accounts. The interest rate must be high enough to encourage customers not to withdraw their money but low enough that there is a decent margin between it and the interest you charge on loans. Set deposit pricing too low, and customers will have no reason not to make regular withdrawals, and you’ll be able to issue fewer loans. Set it too high, and you cut into the profit you make off each loan.

The Future of Banking: Digital Account Opening Solutions

How does digital account opening help?
Digital account opening encourages more deposits into your bank. Customers can open additional saving and interest-bearing accounts, make their initial deposit, and see any other offers they may qualify for as part of your deposit pricing and sales strategy.

Once you set your deposit pricing, your next goal is to get customers—new and old—to take advantage of it. Digital account opening solutions make it easy for customers to open a new account and make a deposit in just a few minutes. Your digital onboarding program can also allow customers to purchase cheques or other services as they set up an account, bringing another source of revenue into your financial institution.

Key Takeaways:

Designed by Bankers for Banks

With IgniteConnex’s banker-designed digital account opening solution, you can encourage customers to set up new accounts and effectively offer savings plans and other products right to customers when they’re most engaged. To learn more about IgniteConnex and raise your deposit over withdrawal rates, schedule a demo with one of our representatives today.

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