5. Review wholesale funding strategies Wholesale funding also helps banks manage interest rate risk – more so than retail deposits. By borrowing amounts at terms more or less in line with those of a commercial loan, banks can effectively match funding to long-term, fixed-rate positions. And in an environment where rates are projected to rise, banks that lock in low rates today, or refinance higher-cost funding, can earn higher spreads once loan demand picks up. The challenges facing today’s banking industry are many, and interest rate risk is big. However, by proactively thinking about repricing deposits, segmenting customers, taking a closer look at derivatives, not overextending the securities portfolio, and reviewing wholesale funding strategies, bank leaders can position their institutions to ride out the uncertainty and succeed in the future. IntraFi Network is the number one provider of deposit products to U.S. financial institutions, a leading provider of overnight and term funding solutions, and one of the nation’s best places to work. Its members include most of the nation’s community banks, minority depository institutions, and community development financial institutions. For more information on IntraFi Network, please contact Bryan Harper, Managing Director, at 866 776-6426, bharper@intrafi.com, or www.IntraFi.com. Wholesale funding also helps banks manage interest rate risk – more so than retail deposits. May • June 2022 13
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