On June 7, 2023, IBISWorld co-hosted the Deposit Strategy Summit in Boston with partners from RelPro and Barlow Research. In attendance were several New England bankers from community, regional and national institutions, including Senior Commercial Leaders, Chief Marketing Officers and Relationship Managers.
Since the failure of Silicon Valley Bank in March, growing and retaining deposits has a been a major topic for banks and credit unions of all shapes and sizes. This has presented a big shift in priorities for bankers who had spent the past several years focused on loan growth in a low interest rate environment.
Knowing we had customers with similar priorities and challenges, IBISWorld and its two partners wanted to organize an event that offered an opportunity to share the current deposit trends, as well as best practices for selling deposit products.
Barlow Research, which specializes in surveying the sentiment of business owners and financial decision makers, started the evening by highlighting a number of eye-opening statistics about just how many small and middle-market companies have been shopping for new deposit accounts in the past six months.
When doing that shopping, the two most important factors those companies were looking for in a new banking provider were:
- Competitive rates
- The bank’s overall stability
Many banks have spent recent months touting their financial stability in the wake of bank failures, but they also find themselves offering products and rates similar to their competition.
It can be difficult for a banker to differentiate themselves in all the noise.
IBISWorld was able to expand on Barlow’s statistics with a few ways that bankers can target deposit-rich industries and create that differentiation.
Oftentimes, bankers will think in terms of sectors such as Healthcare, but within those sectors are particular industries that have their own nuances and deposit needs (for instance, within Healthcare; Chiropractors, Optometrists, or Physical Therapists). On the other hand, there can be industries within a deposit-rich sector like Healthcare that bankers may actually want to avoid for deposits, based on their typical financials (e.g. Hospitals).
Pinpointing the winners and losers within a sector can save you from spending time prospecting the wrong businesses.
In addition to targeted prospecting, understanding what your client’s financial situation might be, based on their industry, can be a key strategy in standing out from the crowd of competitors.
Industry metrics to discuss with deposit clients include:
Revenue Growth, Seasonality, Profit Margins, and Net Cash After Operations.
However, just asking pointed questions about your customer’s current strengths and weaknesses can be a great way to develop the necessary trust that can forge a strong relationship, and keep a customer from shopping around.
Lastly, at the summit, RelPro was able to give insights into how bankers can go beyond their client’s industry and gather information specific to certain companies and their key employees. The company information that RelPro provides can help bankers identify industry operators within their specific geographic footprint, which institutions they may have done business with in the past (via UCC filings) and what you need to know about their executives to build rapport with them (how long they’ve worked there, previous positions, where they went to school, etc).
Overall, the Deposit Strategy Summit was a great way for bankers concerned about a similar topic to come together, share ideas and ask questions of their peers and research providers.
See below for the various takeaways from Barlow Research, IBISWorld and RelPro. If you’re interested in attending an event like this in the future or wish to inquire about other matters, please feel free to contact matt.murphy@ibisworld.com.
Barlow Research
- Businesses are actively shopping for new deposit accounts
- Bank stability is important, but competitive rates are essential
- Most deposits are held by a small portion of businesses
IBISWorld
- Banks can use market intelligence to target the right industries for deposits
- Granularity is important – certain industries may be winners or losers within a single sector
- Bankers can deliver compelling, value-added insights to connect with customers and build more meaningful relationships
RelPro
- Target companies in cash-rich industries to quickly identify new commercial deposit opportunities
- Being viewed by your prospects/clients as a trusted advisor will lead to new business and cross-selling opportunities
- Leveraging technology to integrate company, executive and industry insights enables you to differentiate your prospecting approach, identify market gaps and save bankers precious time
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