According to The Wall Street Journal, these banks have taken in more deposits than they have lost so far this year, whereas regional lenders such as Truist, Citizens Financial, and PacWest have seen their deposit numbers dip.
Meanwhile, banks such as Capital One, Ally Financial, and Goldman Sachs’ Marcus reported quarterly deposit gains.
“The future of everything in banking is digital,” stated Capital One CEO Richard Fairbank during an earnings call in April.
According to the paper, regional banks are dealing with two issues: the previous financial crisis, which terrified clients into moving their money to larger lenders, and rising interest rates, which cause people to move money to items like money market funds for higher yields.
The Federal Deposit Insurance Corp. (FDIC) stated this month that banks’ deposits fell by $472 billion in the first quarter of 2023, the largest drop in over 40 years of record collection.
Furthermore, the St. Louis Fed reported on Friday (June 2) that total bank deposits decreased nearly $13 billion in April, “which would push the decline even further out than the FDIC data.”
The WSJ analysis mentioned the high expense of maintaining a traditional bank. A bank in Tampa can cost up to $500,000 per year to operate, but a midsized branch in New York will cost more than double that amount.
At the same time, technology, according to the research, contributed to the deposit runs on Silicon Valley, Signature, and First Republic banks, since internet banking made it relatively easy for clients to withdraw their money.
