“Only Thing We Have to Fear Is Fear Itself” (FDR)
Just because a product is off balance sheet should not mean it should not be offered.
It's a common almost automatic objection from CFO's of credit unions and community banks to any product or service that takes deposits off the FI's balance sheet. Its something we hear a lot.
But there are compelling reasons to still embrace some products even with the fact that they are taking deposits off balance sheet.
👉 Consumers and businesses are moving deposits out of Community FI's already in search of alternative products not offered by the FI or better rates/lower prices or for a better service. Remember when deposit flows were going into Coinbase because consumers wanted a product that FI's were not offering - those deposits are now flowing to Money Market Funds, Investment Platforms and Big Brand Banks. @Wealthfront doubled its AUM last year by ~$25bn alone.
👉 These deposits are unlikely to ever return to the FI - consumers have almost infinite choice and the companies that are receiving those funds are doing their best to ensure that the consumer does not have to go elsewhere by bundling both investing and banking products into their platforms.
👉 The FI's share of the customers business and the level of engagement by the customer is diluted - why shop in a single store with limited products when you can go to a supermarket and get everything you need and more. Not everything has to be own brand.
The value in offering products even if they may temporarily take deposits off balance sheet is in preserving and growing the long term relationship with the customer.
With Unifimoney customers funds can only be moved between the investment platform and the customers bank accounts at the introducing FI. Not only does this radically reduce the risk of fraud but it ensures that on liquidation of any holding those funds have to go back to the FI to be used.
Unifimoney is a turnkey digital wealth management platform enabling Community Financial Institutions to compete with Fintechs and Big Brand Banks at high speed, low cost and without the need for technical integration. Owned by Palm Ventures a large family office backed investment firm. If you would like to speak to us please reach out or visit the website.
