With banks still flooded with cash in the wake of the pandemic, many are waiting to raise deposit rates, content to watch some excess liquidity run off the balance sheet. But in a rising rate environment, some analysts are raising questions about whether banks risk waiting too long. They cite increasing competitive threats from fintechs — many of which weren’t around the last time banks battled for deposits — and internet-savvy consumers better equipped to chase higher yields elsewhere. Some bankers are also clearly anticipating a fight. Over the next 12 months, 76% percent of bank executives expect deposit competition to increase, and 90% anticipate higher funding costs, according to IntraFi’s most recent quarterly survey. To better understand how banks should be thinking about funding, we recently sat down with Neil Stanley, founder and CEO of The CorePoint, for our Banking with Interest podcast. Neil shared his thoughts on the Federal Reserve interest rate outlook, how soon banks should be responding, alternative investments to consider, and much more. What follows is our conversation, edited for length and clarity. (This article was updated on July 19, 2022.) Why did you start The CorePoint? I was surprised at the lack of art and science in retail banking. Years earlier, when I was working at the Lauritzen Corporation, we had multiple charters, so we could test and learn things at some of the smaller ones. We ended up with a toolkit of ideas we could use with banks across the country. One day my wife said, “Why are you limiting this to the banks you work at? Start your own business.” What will the Fed do over the next few months? Well, I’m not a rate forecaster, but we shouldn’t forget that the Fed has a dual mandate. If either unemployment or inflation is out of line, the Fed is chartered to bring How Banks Can Respond to the Shifting Funding Landscape By Rob Blackwell, Chief Content Officer and Head of External Affairs, IntraFi Network www.coloradobankers.org 20
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