Deposit Performance: Why Money Can't Buy Love

Report Summary

Deposit Performance: Why Money Can't Buy Love

Aite Group estimates that U.S. deposit financial institutions spent up to US$10 billion to reacquire every consumer deposit dollar that was lost to attrition in 2006. The study reveals that financial institutions should significantly improve their deposit

Gwenn Bézard
Co-Founder and Research Director

Boston, MA, May 9, 2007 – A new report from Aite Group, LLC, examines the state of deposit performance in the United States. The report discusses deposit performance trends in the United States, performance gaps between the 9% of institutions that are high performers and other financial institutions, and opportunities for improvements.

Using unique insight collected by Harland Financial Solutions' Deposit Benchmarking database, Aite Group analyzes deposit performance across a sample of U.S. banks, thrifts, and credit unions with assets under US$50 billion. Among other findings, the benchmark shows that financial institutions that focus on developing existing relationships instead of acquiring new relationships are the most likely to outperform the market overall.

"Once again, the old adage that 'Money can't buy love' is proven to be true. Institutions can't build successful deposit relationships by just 'buying' customers," said Gwenn Bézard, research director at Aite Group and author of the report. "Most financial institutions are spinning their wheels, caught in a vicious circle of overpaying for highly volatile new deposit relationships to recover mismanaged deposit relationships. By better managing deposit pricing, they could significantly improve deposit retention and organic growth performance," added Bézard.

This 26-page Impact Report contains 15 figures and tables. Clients of Aite Group's Retail Banking and Wholesale Banking services can download the report.

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