Tuesday Topic: The Battle for Online Deposits

Thanks Barb,

Could competition for volume actually be intensifying because of the rate cuts?  When global forces are moving interest rates instead of the supply and demand for deposits and loans, it seems plausible to me that the local competition for deposits and loans could actually become relatively more intense than it was at higher interest rates because the non-interest factors in winning the business become a bigger part of the equation.  The supply equation states that we will get more of something when we are willing to pay more for it.  If we are telling depositors that we will be paying less, then it is very reasonable to think that depositors will offer less volume across the industry.  Meanwhile, the loan/deposit levels and trends indicate that banks need more deposits, not less.  With the potential for less deposits industry-wide and local deposit demand being strong, local competition by definition will intensify.   What does everyone else think?

Neil

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Neil Stanley
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 10-08-2019 09:15
From: Barb Rehm
Subject: Tuesday Topic: The Battle for Online Deposits

Despite two rate cuts and the prospect of a third later this month, the competition for online deposits continues to intensify. American Banker takes a detailed look at the players and their strategies. 

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Barb Rehm
Senior Managing Director
Promontory Interfinancial Network, LLC
Arlington VA
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