Harnessing the power of deposits

first_img 6SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr Realize it or not, there is an entire generation that only knows extremely low interest rates on loans. That same generation also only knows near-zero deposit dividend rates. This may present a unique challenge for a financial institution that needs to raise loan rates if they’re forced to raise cost of funds.As the graph shows, over the past decade, credit union deposits have skyrocketed. While this may seem like fantastic news, (an abundant, inexpensive resource that generates income), there’s risk if these deposits become unstable.Changing demographics presents a significant risk. Medical advancements and better quality of life have improved mortality rates over the past few decades. However, the outlook for longer life expectancies was slightly optimistic. Updates in the last two years have pulled down companies’ estimates of what they’ll owe future retirees, because life expectancies have fallen. This may also reduce projected retiree deposits at your credit union. continue reading »last_img

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