As the economy improves, financial institutions should be prepared for a decline in demand for deposits as consumers shift money from savings to spending. The pace of bank deposits increased by only 0.6 percent in the third quarter of this year compared to an increase of 1.2 percent during the same period last year according to the latest data reported by the FDIC.
Conversely, the amount of consumer spending in the third quarter of this year increased by 3.0 percent compared to an increase of only 1.7 percent during the same time period last year according to the latest data released by the U.S. Department of Commerce. The increase in consumer spending is expected to grow as long as the economy is improving.
Financial institutions should expect greater competition for consumer deposits in 2016 and beyond, not just from other financial institutions, but also from consumers’ tendency to increase spending when the economy improves. This scenario demonstrates the critical role behavioral finance plays in forecasting demand for deposits. Deposits Dynamics is the only scientific forecast incorporating behavioral finance as a predictor, hence increasing the predictability and accuracy of the forecast.
Deposits Dynamics provides a detailed forecast of rates and balances of each major deposit account for the next 30, 60 and 90 days. If you want to stay ahead, you need to see ahead.