With this new (in 2018) characterization of reciprocal deposits — and because reciprocal deposits tend to be lower-cost deposits that come in large increments from local customers — more banks embraced reciprocal deposits as an attractive option for growing franchise value. Then, the high-profile bank failures in spring 2023 drew attention to the risks for bank customers who have cash balances greater than the FDIC-insured maximum of $250,000, thereby increasing demand for large deposit safety. A survey of bank executives at the time revealed that 68% of respondents experienced an increase in inquiries about the safety of their deposits.3 Banks that were already members of a deposit network, such as the IntraFi network, had a solution at the ready, and other banks quickly sought reciprocal deposit network membership so they could offer their customers the peace of mind of knowing that their large cash balances and deposits had access to protection. The awareness that uninsured deposits pose a risk to bank customers, particularly those who need daily access to operational cash, increased after the 2023 banking crisis and has remained sporadically in the news, with various news outlets reporting on how customers can protect their cash balances over $250,000. Reciprocal deposit networks are usually featured in these articles as they offer the convenience of managing one bank relationship to access insurance across many banks. As a result, more customers know to ask for access, and more banks proactively offer the services to strengthen relationships with high-value customers. 28 NEBRASKA BANKER
RkJQdWJsaXNoZXIy MTg3NDExNQ==