When it comes to determining the value of a deposit base, there are three major components that drive franchise value: effective cost of funds, interest rate sensitivity (duration and convexity) and volatility.
Tag: Deposit Performance
While we know many of our readers have seen our data analytics on the best (green) and worst times (red) to market for deposits (below), but we just wanted to remind your bank that now remains one of the best times to market checking, savings, IRA and other accounts all thanks to the IRS and consumer behavior. This is a tactic that every bank should do because it is so effective. Conversion rates for email campaigns are often double than regular marketing efforts and the return is significant.
Hopefully, your bank has pulled all your advertising and major marketing campaigns around products for the months of November and December as those two months are the most ineffective to promote bank products. Not only are people and businesses distracted during those times, but banks have to compete against a barrage of other advertising and marketing messages from retailers. Given higher advertising prices and lower response rates, December and November, respectively, are the two worst months for marketing return on investment.
Only an estimated 60% of banks allow customers to use combined balances of multiple products (both other deposit accounts and/or loans) to offset minimum balance requirements or average balance requirements in order to have their monthly account fees waived. Very few community banks allow personal/retail accounts to contribute to the combined balance requirements of their business accounts. This is a mistake as there are some distinct advantages.
The Advantage of Combined Balances