Trends in Business Deposits

Larry MiddlemanLarry Middleman

CUBG National ConferenceCUBG National Conference

August 22, 2012August 22, 2012

PayPal Makes Play for More Mobile, POS Transactions

“What’s in a name? At San Jose, Calif. Headquartered PayPal, potentially a lot. That’s because the payments innovator has now dropped “website” from its U.S. product names as it rolls out a suite of tools said to be aimed at helping small businesses collect money.”

•Online payments

•In-person, offline payments – ability to accept credit cards, PayPal, and checks in person using your smartphone, and a free thumb-sized credit card reader and app

•Mobile payments

•Invoicing

•Debit cards

CU Times, 4/6/12

Deposit ServicesDeposit Servicesand and

Fee IncomeFee Income

The goal of most credit unions in today’s market is increased fee income, not increased deposits

Deposits? Who Wants Deposits??Deposits? Who Wants Deposits??

What Credit Unions are Doing in Business Deposits…What Credit Unions are Doing in Business Deposits…

Some are doing nothing Few are starting out with a simple program Many are ramping it up past the basics A small number are doing the whole thing well

How to REALLY Get it DoneHow to REALLY Get it Done

Two tiered basic business checking account Account analysis Remote deposit capture ACH origination for business Business online banking Sweep and balance management

AccountAccount

AnalysisAnalysis

Account Analysis DefinedAccount Analysis Defined

Account Analysis is an informational tool used to determine the balance levels needed by a

commercial business in order to offset fees for services provided by the credit union. The

business member’s account balances are used to compensate for the service charges associated

with the account(s) activity.

Standard Charges for Account AnalysisStandard Charges for Account Analysis

Systems: Multiple Analysis PackagesSystems: Multiple Analysis Packages

Systems: Account RollupSystems: Account Rollup

Systems: Analyzed Money MarketSystems: Analyzed Money Market

Sweep Services Sweep Services and Balance and Balance ManagementManagement

Sweep: Target BalanceSweep: Target Balance

Excess Funds

Deficit of Funds

12

2

1

Reg D

Low Balance Transfer Linear FundingLow Balance Transfer Linear Funding

A fee can be set for each transfer if desired

Linear funding allows the peg balance to be funded via a series of individual transfers

from multiple accounts.

High Balance TransferHigh Balance Transfer

High Balance Transfers allow the member to transfer excess funds to payoff loan

balances or to an income account.

So who wants to So who wants to make moneymake money on on

business deposits?????business deposits?????

A Case Study…A Case Study…

Bank of America Credit Union Difference

Lower Service Charges

$630 $319 $311

Higher Earnings on Available Balance

$97 $125 $28

Total Monthly Benefit $339

Annual Benefit of Banking with CU $4,068

Are credit unions EVER going to use deposit account as a loan risk management tool ???

One more point…One more point…

And that’s the way it is…