CFOs and finance executives have justifiable concerns when it comes to the safety of their deposits. Alongside the failures of Silicon Valley Bank, First Republic Bank, and Signature Bank in 2023, local banks have struggled to maintain strong balance sheets in 2024. These factors, despite a rise in optimism about the global economy itself, may be worrying to CFOs regarding their local banks’ integrity and solvency.
These concerns are evident in recent survey data. According to financial services firm Ampersand’s recently released depositor’s priority survey report, more than half (55%) of the over 100 executives and business leaders they surveyed said they were concerned with the safety of their company’s future bank deposits.
Interest rates, once one of the largest drivers of value when choosing a bank account, are now less critical than deposit security and safety. Seventy-seven percent of respondents said they would be willing to give up some of their returns to an institution that guarantees the safety of deposits, presumably beyond the FDIC’s $250,000. The concern here is unsurprising, as 82% said their business typically keeps over $250,000 in one account.
Business leaders also see value in choosing a bank with more security and integrity. Depositors said ensuring deposits are fully insured (68%) and the strength and soundness of the financial institution (59%) were very important when deciding where to place funds.
Despite its perceived value, less than half of business leaders have taken action to remedy security concerns. Forty-four percent said they had moved some funds to a larger and/or safer bank, alongside an equal number who said they are spreading out funds across multiple institutions to maximize FDIC coverage without using a third-party provider/deposit management company.
As lending requirements sometimes stipulate minimum deposit requirements at the lender’s institution, this agreement has many business leaders keeping money in places they would otherwise want to place elsewhere. Out of the 28% that said they were required to keep deposits at the lender’s institution, 87% said they would move their deposits to another financial institution if they could.
Deciding Factors When Choosing a Bank
Outside of safety concerns, finance leaders are also looking at customer relations and values as well as rates and fees associated with the account. More than half (52%) said fee levels for banking transactions were very important when identifying important factors when deciding where to deposit funds. Just under half (48%) said attractive rates/ rate of return paid on deposits were also very important.
What financial institutions do outside of banking is of much less importance to their account holders. Just over a quarter (27%) said a bank that is aligned on environmental issues and social issues that their companies care about is very important. Both topics were also named as not at all important by 12% of all respondents, more than 10 times the amount for all other choice categories for things that are not at all important in the decision-making process of deposit allocations.
Ampersand’s survey consisted of 108 executives and senior managers involved in administrating cash deposits on behalf of their employers or clients.
It was taken in October 2023 and published in March 2024. Survey respondents were finance leaders with titles of finance manager (39%), CFO (20%), CEO (19%), other management role (8%), and other C-suite roles (6%). Eight percent of respondents were a mix of managing partners, investors, financial advisors, and other roles.