Although online banks offer more competitive rates, they lack the full suite of products and services that customers have come to appreciate from big banks, said Wells Fargo’s John Shrewsberry.
High net-worth individuals, companies and other financial institutions have been threatening to move sizeable deposits unless they get paid more. For them, even a tiny fraction of a percentage point of added interest can be worthwhile, he noted. But that is not true for most individuals who would reap scant rewards and face hassles like having to change direct deposit enrollment or automatic payments.
“That is part of the bargain,” he said. “There’s the question of, how much am I getting paid for my deposit, and how much value am I getting for that deposit relationship with the bank?” Low deposit rates at Citigroup are “a reflection of the state of competition,” said the bank’s finance chief, John Gerspach. The widening gap between loan rates and deposit rates helped drive Citi’s U.S. retail banking revenue up 7 percent, he said.
Asked when banks would start paying more, JPMorgan Chief Financial Officer Marianne Lake said she expected banks to “remain quite disciplined” on rates through the remainder of 2018. Bank of America is set to report results on Wednesday.
Analysts and bankers pointed to recent tax reform as one potential force of change.
