The financial services industry has been rocked by numerous challenges over the past couple of years, perhaps none more significant than the shocking decline in the number of deposits U.S. consumers are making. From Q1 2022 through Q2 2023, U.S. bank deposits plunged nearly $1 trillion—the longest sustained decline in more than 30 years. Things haven’t gotten much better in the months since then, as five of nine major U.S. banks reported quarter-over-quarter decreases in deposits in Q4 2023, according to S&P Global Market Intelligence.
The failure of Silicon Valley Bank and others played a role, as fear of bank failures made investors skittish about depositing large sums of money. However, other factors also appear to be contributing to deposit declines. There is also increased competition from non-traditional financial institutions (FIs), including FinTechs who are providing savings account like products with much higher rates of return.
Remaining resilient in this type of environment can be very challenging for banks. This will require increased flexibility and an ‘all-of-the-above’ approach to cash flow management strategies that increase liquidity.
Digital process efficiencies
