Global Fintech nCino Launches Research Institute with New Analysis of 10 million Bank Accounts

Analysis of over 10 million bank accounts across 152 U.S.-based credit unions reveals that 90% of depositors are likely to move funds between institutions in response to economic changes and interest rate adjustments. The actions of these depositors reflect a shifting deposit landscape as institutions brace for potential economic challenges.

This new research from nCino, the leading provider of intelligent, best-in-class banking solutions, was conducted by a coalition of five academic partners via the nCino Research Institute (nRI). The group leverages proprietary data and interprets global economic indicators to deliver unique insights on economic trends and help financial institutions navigate an unpredictable economic landscape.

As part of its launch, the nRI published a flagship study shedding light on a critical challenge for financial institutions’ deposit strategies.

Accounts with balances under $25,000 make up 90% of all accounts but hold only 30% of total deposits across institutions. This group is highly sensitive to interest rates and tends to move funds to optimize savings. Conversely, high-balance depositors (those with over $25,000) hold 70% of total deposits and prioritize liquidity over yield, showing less response to rate changes and are more likely to use their funds to pay for major life events.

Both groups pose key challenges for financial institutions in shaping their deposit strategies.

“The nRI’s findings make clear that the needs of high- and low-balance depositors require different approaches to ensure financial institutions can adequately meet their customers’ and members’ needs and maintain deposit strength,” said Danielle Pearson, nCino Research Institute Program Manager. “Deposits are the backbone of every institution and enable them to offer diverse financial products and services, from mortgages and auto loans to lines of credit. Amid economic volatility, having a deposit strategy built on nuanced behavioral and economic analysis is a competitive differentiator.”

How depositors use their accounts has shifted away from traditional savings, to using their accounts to mitigate economic risks by either moving to more appealing interest rates, or pooling funds. Financial institutions now face an urgent challenge: evolve deposit strategies beyond traditional interest rate adjustments to meet depositor demands while maximizing retention and profitability.

Key Findings

• Deposit Skewness:

1. • Just 10% of depositors hold 70% of total deposits, with high-balance accounts (over $25,000) driving this concentration.

1. 1. High-balance depositors prioritize liquidity over interest rate yield, demonstrating greater stickiness during market fluctuations.

1. Rate-Sensitivity Segmentation:

1. • Low-balance depositors (90% of accounts) are highly rate-sensitive and inclined to switch institutions.

1. 1. High-balance depositors, holding 70% of assets, are relatively inelastic and motivated by liquidity needs rather than rates.

1. The ‘Stickiness’ Myth:
   1. Stability in deposit dollars obscures risk, as rate-sensitive low-balance accounts threaten churn despite aggregate stability.

1. Deposit Stability Misconception

1. • While high-balance depositors ensure aggregate stability, low-balance account activity disproportionately drives account-level churn.

If you would like to learn more about the research, or the nCino Research Institute, you can also visit https://www.ncino.com/research-institute