OptimaFi Insights 2026 Digital - Flipbook - Page 3
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Feeling the Pressure
Noninterest bearing deposits are shrinking as a share of banks’ funding.
Source: Opt imaFI
National PPI*
Banks with $10B-$100B in assets
Banks with >$100B in assets
27.5%
25.0%
22.5%
Seeing the Full Picture
A bank can look at file extracts from its
core system to find those specific insights,
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03
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20.0%
03
Percent of noninterest bearing deposits
30.0%
Marks explains. They can then use those
insights to craft marketing campaigns
targeted toward specific customer seg-
*The nat ional peer performance index (PPI) is the Opt imaFI Peer Performance Index,
ments. Having this big-picture analysis
which includes only tr ue communit y banks and excludes certain t ypes of inst it ut ions.
of customer behavior and portfolio mixes
ahead of time can then be compared with
any changes after one of the bank’s marketing campaigns.
mixes and behaviors, and then adjusting
A Smarter Way to Compete
Competition for core deposits has
pricing based on that data.
“The combination of products and ser-
“Because we’re targeting specific
customers or specific prospects, we’re
able to see the change in that customer’s
emerged as a major industry challenge in
vices they hold, the level of balances they
behavior,” Marks says. “What’s their
the post-Covid-19 years. Not only were
hold, the activity in the accounts: Those
increase or decrease in accounts? What’s
banks facing a rising interest rate envi-
are all going to be predictive of capacity
their increase or decrease in balances?
ronment, but they also saw more compe-
and propensity factors around how to most
And then for prospects, we ask, ‘Did they
tition from nonbank fintech firms, such
efficiently price deposit rates,” Keith says.
become a customer and what were the
as Chime, that increasingly compete for
For example, if a bank sees that a cus-
accounts and balances that they brought
consumer deposits. While overall industry
tomer has only a CD with their organi-
deposits grew at a fairly steady clip over
zation, then executives might be able to
the past five quarters, the proportion of
safely assume that that consumer has a
sons from working to revamp the bank’s
noninterest bearing deposits has fallen.
checking account and other deposits with
deposit strategy; chiefly, banks don’t need
The industry net interest margin was
another institution. Or if the customer
to skimp on rates or pay the very most
3.34% in the third quarter of 2025.
has a checking account with an aver-
they can afford to keep the customers
age balance above $10,000, it may be
they already have.
Too many banks tend to price deposits
when they became a customer?’”
Armour has learned some valuable les-
based on competitive parity, says Tim
reasonable to infer that they have more
Keith, CEO of OptimaFI. They may look
money elsewhere. Banks can use these
against zero and there’s a balance in the
at what their local competitors are paying
kinds of customer insights to figure out
cycle, once you go through the switching
for a certificate of deposit, for example,
where they can strategically apply rates to
process as a customer, there’s an inertia
and try to match that. Or they price
grow customer relationships, rather than
that now gets built into wherever that
deposits based on a predetermined cost of
broadly appeal to consumers who are
relationship is,” Armour says. “When
funding they want to see on their balance
simply shopping around for the best rate,
you’re talking to your own customers, you
sheet. Instead, bankers may be better
says Dan Marks, partner and president of
don’t have to be at the very tip top of the
served by analyzing customers’ product
the OptimaFI Growth division.
market to get a good response.”
“When rates are not compressed
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