Using Personal Combined Balances for Business Accounts

Deposit Account Design

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


As a relationship account building tactic, combined balance requirements dramatically improve profitability by incentivizing accounts to move balances over from other financial institutions or starting additional new account relationships with the bank. Increased profitability is not only driven by higher aggregate balances, but also through enhanced deposit performance. Combined balance accounts tend to have lower deposit rate sensitivities than single, standalone account relationships, have greater positive convexity and have longer lifetime value due to higher retention rates (lower account churn).


The Business vs Retail Cross-Sell


Combining multiple business deposit accounts is good, but combining separate commercial products is even better. Profitability on two business checking accounts is good, but a checking account and savings account is better. Better still is combining a checking account with cash management or trust servicing.  However, when combining products that cross business and retail lines, a funny thing happens - usage tends to be higher, more fees are generated and greater engagement usually occurs (times in branch, new product participation rate, etc.).  What you are more likely to create is a bank “Super User” that not only is profitable, but becomes an advocate for the bank. Creating a fee and reward structure that takes into account both multiple business products and multiple retail products increases a bank’s share of wallet with the total relationship. The end result is not only a more profitable current customer, but a customer that has a higher probability of being profitable in the future that also has a higher likelihood of having above average satisfaction scores and is more likely to recommend your bank.




As the common refrain in banking says – superior banking doesn’t happen by accident. Delivering a superior banking product is by design and while customer service is one part of the equation, another major part of the calculus is having intelligently designed products. By creating a reason for customers to bring over their personal accounts to their business accounts or vice versa, banks can increase profitability more than the sum of their parts. As you go through your annual product review, take a look and consider adding personal accounts to your combined balance targets, at least on a test basis and at least for elite level, high net worth-type accounts. If you do, we think you will find it well worth your while.