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Deposit pricing strategies for financial institutions

Financial institutions grappling with rising rates for retail deposits and increased competition for funding can benefit from understanding and practicing deposit pricing strategies. Deposit pricing that incorporates segmentation, in particular, can mitigate cost changes, help raise funding, or do both.

These deposit pricing strategies can be implemented in financial institutions looking to mitigate the impact of rate changes while retaining and growing deposits.

Even with moderate cost benefits, the practice of segmentation will:

  • Prepare financial institutions for upcoming changes in the rate and economic environments
  • Improve product options being considered while going through the exercise
  • Train staff and give them a better understanding of what needs to be accomplished with segmentation