Banks face a daunting task: to draw and keep corporate deposits while relatively high interest rates have prompted some customers to move their funds or pay down debt. Corporate deposits in the European Union surged to approximately 20 percent growth during the COVID-19 pandemic, but this growth slowed to about 3 percent last year, partner Nunzio Digiacomo and coauthors note. For banks to attract corporate deposits in this competitive landscape, they may consider improving payment collections and optimizing clients’ forecasting.
Image description:
A series of 3 line graphs shows different aspects of the European Union’s corporate deposits, 2010–23. The first graph, with a base index of 100 in 2010, shows the performance of corporate deposits over retail deposits, with corporate nearly doubling retail. The second graph shows the quarterly year-over-year percentage change in corporate deposits, with a long-term average of about 6%, then a drop below that average in the past 2 years. The third graph shows the European Central Bank’s main refinancing operations rate as a percentage, with a steady decline from 1.5% in 2010 to zero by 2016, remaining at zero until 2022, and then rising to 4.5% by the end of 2023.
Source: European Central Bank; Eurostat; McKinsey analysis.
End image description.
To read the article, see “Winning in corporate deposits through transaction banking,” February 28, 2024.