Between April and October, total bank deposits fell by nearly $340 billion, and lower business deposits were a significant contributor to this decline. In fact, businesses reduced their cash on hand by $66 billion from mid-2021 to mid-2022.
With fewer deposits available, many financial institutions are considering options for attracting new customers. In the past, this meant spending significant resources on marketing or expansion. Today, there is a simpler solution – financial institutions that need deposits can partner with a fintech provider to supplement their long-term liquidity needs.
Corporate Deposits Continue to Decline
As business costs have risen, many firms have been forced to trim expenses or spend cash reserves to maintain their current prices. In addition, many firms have used their cash reserves to reduce reliance on debt financing, especially as interest rates have climbed. These factors have contributed to lower business cash on hand and, therefore, declining bank deposits.
Higher rates and inflation are expected to continue into 2023. With these pressures hindering businesses, corporate deposits could continue to fall. In fact, bank deposits are expected to decline a total of 6% by the end of the year. As deposits decline, financial institutions must consider options for managing their balance sheet.
With Fintech, Financial Institutions Can Gain Depositors Outside Their Community
Many banks and credit unions focus solely on creating customer relationships in their community. This strategy has many benefits, like creating loyalty and fostering trust. However, institutions with only a local strategy are excluding potential depositors.
When deposit needs increase, geographical expansion is often the first thought, but this approach has significant drawbacks. For one, recreating the locally established trust in a new location can be difficult. Additionally, it’s expensive to market to a new audience, and establishing a new physical location usually requires significant investment.
When faced with the decision to remain local and accept fewer depositors or incur the costs of expansion, leaders can feel like there is no correct decision. Fortunately, a third option exists – financial institutions can partner with a fintech provider that offers stable liquidity solutions.
Fintech powered deposit management services make it simple for banks and credit unions to grow their deposits without adding new locations or increasing their marketing budget. With this technology, financial institutions can access long-term deposits from across the country without additional effort. In short, financial institutions that partner with a deposit management company can reap the benefits of expansion without the effort and expense.
Partner with ADM for Stable, Long-Term Deposits
Our company, the American Deposit Management Co. [ADM] helps financial institutions supplement their liquidity with stable, long-term deposits. Financial institutions in the ADM network can set maximum and minimum balances to ensure they only receive the funds they need.
There Are No Fees to Join the ADM Network
Unlike some of our competitors, ADM does not charge a fee to our member banks and credit unions. This structure ensures a mutually beneficial partnership where financial institutions can access reliable funding without worrying about fees or unexpected costs.
When deposits are declining, financial institutions need a simple and cost-effective way to gain new depositors. Our transparent model allows banks and credit unions to grow their deposits with no fees and no hassle.
To learn more or join our network, contact a member of our team today.
*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.