In the last 20 years, the cost of the dollars institutions currently have and the cost of a new dollar out of the marketplace (a one-year CD) have been very similar. Recently, those lines have started to diverge, and the replacement cost has become dramatically higher.
While CDs may have been the preferred option in prior economic environments, today’s unprecedented circumstances call for growing core deposits. Taking a closer look at the advantages of Kasasa’s reward checking accounts — and their unique COF discount — could be a key strategy to reducing fragility in your deposit portfolio.
Although the margin benefit of Kasasa reward checking accounts may seem counterintuitive at first glance given their high-yield payouts, a closer look at their cost structure reveals proven advantages.
Grow core deposits — While industry financial institutions lost over 1% in total deposits, Kasasa institutions grew over 3.26%.1
Create stickier relationships — Kasasa partner institutions saw 93% retention in deposits. 1
Reduce reliance on expensive CDs — Kasasa partner institutions are 1/3 less reliant on hot money CDs.1
Leverage built-in COF discount — Kasasa partner institutions enjoy a 64% COF discount.2
Offering a reward account is only the beginning — you also need expert guidance. Kasasa provides an elite level of consultative guidance that stems from the knowledge and real-world experience gained from over 20 years and $20B powered deposits. This allows us to access analytics for 3 million reward checking account holders at more than 600 community financial institutions (CFI). Combine that with local, dedicated consultants focused only on the institution’s success, over 50 ad-hoc tools, and proven retail activation — and the result is a significant decrease in the investment risk of reward checking.
CDs or long-term borrowings are an expensive and unwieldy solution for the most likely scenario facing financial institutions in the United States. With an epic funding gap in full swing and increasing funding costs eroding ROA, growing low-cost core deposits is a must to survive.
Now is the time to take an in-depth look at how high-yield Kasasa reward checking accounts can attract the core deposits you need — at a fraction of the cost of CDs.
1FDIC/NCUA Q1 2023 data compared to Q4 data, comparing Kasasa partners to non-Kasasa partners. 2Q4 2022 Kasasa Analytics