By combining industry-specific insights, relationship-based product design and rate sensitivity analysis, community banks can grow their commercial deposit base in a way that is both strategic and sustainable. Deposit Strategies To Deepen Commercial Relationships By Matt Helsing, SVP and Northwest Regional Manager PCBB, ICBC Associate Member Many community banks have struggled in recent years to grow deposits while keeping costs in check. As competition intensifies, the banks that succeed will be those that take a more strategic and segmented approach. Total deposit balances in U.S. banks dropped by 7% between Q1 2022 and Q3 2023, reflecting broader headwinds for financial institutions. However, commercial balances rose 2% between Q3 2023 and Q1 2024, according to a 2024 McKinsey report. Analysts expect continued gains through 2025, giving community banks a window to refine and expand their approach. To capitalize on this trend, community banks may want to consider shifting from broad rate-based tactics to more targeted, relationship-oriented strategies. The following are some practical ways to strengthen and grow your commercial deposit base. STRENGTHEN PRIMARY BANKING RELATIONSHIPS Customers with a full-service relationship generate far greater value — up to 20% higher ROE — than lending-only clients. Make deposit relationships a core part of your business banking model by cross-promoting treasury services, cash management and account bundling. One effective tactic: tie deposits to lending. Requiring a deposit relationship as part of a lending package can be mutually beneficial. It simplifies payments for the borrower and broadens the relationship for the bank. It also gives your institution better visibility into the business’s liquidity patterns. 18 | INDEPENDENT REPORT
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