Pick your deposit profitability strategy…Only 1 is guaranteed to work (well, maybe 2 if you’re lucky)…
- Ignore it and watch your deposits and branches become less and less profitable every day
- Slash your branch network and hope your best accounts don’t leave (they probably will)
- Use accounting/data to calculate profitability and charge the money losers more
The ONLY way you can systematically improve the profitability of most of your deposits is by brute force…
…You have to make them more profitable.
They’re not going to wake up one day and decide to become profitable on their own. You must force them into profitability. That’s your job…Improve the bank’s profits
And there are only 2 ways you can improve #DepositProfitability…increase the revenue you earn from them (fees) or decrease the costs they impose on you (expenses).
Now it would be nice if we could ignore this issue and have deposits that were naturally profitable, earning way more for the bank than the costs of handling them. That was how it worked for your father’s bank. But it’s not the 1960s any more.
Huge margins in the past covered a lot of banking sins. We don’t have that luxury today. Tight margins mean everything is on the table.
Improving deposit profitability is your best ROI bet.