Alkami Telemetry Data – CD Openings

Source: 2023 Alkami Telemetry Data is sourced from a panel of more than 20 financial institutions with a range of asset sizes from under $500M to $15B. The data panel represents 2.16 billion transactions analyzed representing the financial behaviors of approximately 1.1 million account holders across 8 different age brackets.

What we’re seeing: As rising interest rates have shifted the focus for financial institutions from lending to deposits, consumer demand for CDs has proven to be highly interest rate sensitive. In February 2022, before the Fed began raising rates, the prime interest rate* was 3.25 percent. By May, the rate had increased by 0.75 percent and nearly 2x as many CDs were opened in the month of May than in February. By August, rates had increased another 1.5 percent and the number of CDs opened in August was 6.5x greater than the number opened in February. From September through December 2022, rates increased another 2 percent and the number of CDs opened in January 2023 was 14x greater than the number opened in February 2022. So far in 2023, each month has had at least 10x the number of CD openings than were occurring before the rate increases began and overall rates have increased another 0.75 percent. *Interest Rate data sourced from the St. Louis Federal Reserve Bank at https://fred.stlouisfed.org

Takeaway: Financial institutions have had big success attracting deposits thanks to a higher interest rate environment since the Fed started raising rates 15 months ago. New CD openings peaked at a 7-year high in January 2023 as prime interest rates had increased by 3.25 percent since February 2022. The number of new openings in February-April 2023 have plateaued at this new high level, even as rates have crept upward even further.

Call to action for FIs: Using insights can help your financial institution monitor the maturity date on CDs. Use this opportunity to not only hold on to the CDs, but to diversify into other deposit or investment accounts for your account holders to retain this business.

Interested in learning how customer insights and marketing automation can empower your financial institution? Check this out.