An experienced chief risk officer told me once, “Deposits are the inventory of banks.”
A good friend and business partner in the retail business (cigars and whiskey, fun!) told me, “You can’t sell what you don’t have.”
In banking it is a bit more complex than that. Most banks are generating revenue with significant amounts of duration mismatch risk. They have ample demand deposits (depositors can redeem the deposits anytime) and they are making 1, 2, 3 year or longer loans.
Now is the time when the tide goes out and we will see who is swimming naked.
One of our key customers is using our reporting to see which banks have excess deposits and which banks are short on deposits.
How are they using this information?
This data allows them to connect banks that need deposits with banks that have extra deposits. They are a leader in the wholesale deposit market.
There is a land grab going on right now around deposits.
How is your institution handling your match funding? Been a while since you had to use that term “match funding”? Rewind to a year ago and everyone was flush with deposits and had minimal interest expense.
Oh how times have changed.
It is about to get real interesting.
I post weekly about banking, data science and family adventures.
Digging deep on banks is what I do. If you would like to identify banks with excess deposits, reach out and we can connect you with simple reporting to provide these answers.