The Dual Role of Digital in Retaining Small-Business Deposits

Small-business deposits are in flux at traditional FIs, with a quarter of those businesses moving deposits to other institutions in the past year. Often, the move is to another bank or credit union, but increasingly nonbank fintech companies are getting in on the action. For banks and credit unions intent on building and maintaining strong relationships with business clients, the chase for better rates and the ease of finding them create unprecedented risks to the ability to maintain those deposits.

These shifts in deposits have been building for years. Although businesses tend to hold their checking, savings, and investments at their primary FI, that loyalty is not guaranteed. Banks and credit unions need to build or deploy digital features that initiate daily engagement and rapport with business clients, promote saving, and put the FIs in the position of a partner in the long-term success of the businesses that bank with them.

Key questions discussed in this report:

• How can relationship-focused financial institutions hold on to business deposits in an environment of rising rates?
• What kind of digital tools do banks need to deploy to retain business clients?
• How can digital tools help create sticky habits for businesses that need to save operating cash?

Companies mentioned:

Apple, First Republic Bank, Live Oak Bank, PayPal, QuickBooks, Shopify, Silicon Valley Bank, SoFi, Square