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The economic circumstances of the last few years have given consumers ample reasons to deposit more frequently. In the wake of the pandemic-induced slowdown in spending as well as recovery initiatives vis-à-vis stimulus checks and Paycheck Protection Program loans for businesses, most popular banking institutions have seen a sizable upturn in deposit numbers.

However, these excess deposits – in tandem with ripple effects from the market’s overall volatility – have altered banking’s traditional model for balancing deposit intake alongside loans. As of Q2 2022, the loan-to-share ratio for the industry remains at 74.8%, a marked difference from the 84% documented at the end of 2019. Many of the largest commercial banks have loan-to-deposit ratios well under 70%; with deposit volume generally outstripping the number of loans being given out, banking entities have less of a pressing need to pursue a greater share of consumer deposits. This dynamic has also resulted in banks capping their rates at low numbers, with many saving accounts boasting interest rates between 5 to 10 basis points. In light of the current market outlook, it doesn’t appear as though this trend will be changing anytime soon.

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