Deposits for banks

The most important function of a bank is to obtain deposits due to its low cost of funding, and invest it by lending at a higher rate. Banks cannot function without deposits from savers. Building deposits takes time. Increase in deposits helps the bank fund more advances/loans and grow the business.

In competitive market of seemingly similar deposits offerings from all banks, we bring an innovative term deposits (Fixed Deposit and Recurring Deposit in India; CD in USA) product for bank, which is very flexible and can raise (increase) deposits for the bank. It can also reduce cost of funds as deposit runs longer – longer it runs, the cost of funds comes down.

This can give the bank competitive advantage of having additional product that gives lot of flexibility & advantage to both bank and their customers. It can get the bank deposits, which is over and above their existing deposits. It can make it attractive for customers to invest in deposits by bringing behavioral change in them. It can also be customer acquisition tool for the bank to grow business.

It generates deposits through behavioral change in people towards term deposits, making it more attractive for bank’s customers to put money in term deposits and frequently. It helps build customer loyalty. Helps bank raise term deposits through incremental deposits without stressing the ALM (asset and liability management). The customer puts money in deposits under this product due to the high flexibility and gains this product provides (in spite of customer paying fees for amendments/penalty). Analytical auto suggestion enables bank’s customer to look at options and take informed decisions to help them make a better gain. Customer feels enabled to take informed decision if they still gain in spite of paying fees to bank for amendments. The bank additionally also earns in fees for amendments made to the deposit, usage of cards, etc. The ALM gets more funds to lend and grows the bank’s business.

First invention in term deposits since the start of banking. The product has 40 features. It can also be differentiating feature for the bank for having unique product offering at this time as early adopter – to attract customers from other banks.

It does not violate any RBI (Reserve Bank of India) regulations.

It does not disturb the bank’s existing IT systems, nor replace the bank’s existing deposits. It will work in tandem with all existing software, not replace anything. It will rest in the bank’s server at the bank’s central location. It will use APIs to communicate with the CBS (core banking system) and integrate. For banks using earlier/legacy CBS that do not have APIs, it can access data from database for all transactions.

Benefit for bank’s customer: It helps create a Corpus, gives the option of Withdrawals, gives convenience of savings bank but with deposit rates, and very easy to use. It caters to all forms of term deposits – fixed deposits and recurring deposits. Customer can put or take their money, increase or decrease tenure and pay-off as and when they want. Customer looks at option for better gain for their activities/transactions and take informed decision, helping them feel more in control.

Benefit for bank: A deposit so flexible encourages people to put money as it is easily configurable. This helps bank in getting more deposits. Also, a bank can earn a lot in fees for amendments made to the Deposit, usage of cards, etc. In turn it helps the banking system as funds get channelized to it.

While this product makes term deposit very flexible from bank’s customers’ perspective, the bank controls on how much flexibility and frequency bank would allow to a customer - the bank sets the boundaries. Bank’s Product Manager for term-deposit/fixed-deposit can make changes in flexibility of deposits whenever required and set new effective date for updates in amount of flexibility.

This is the only software product that helps the bank get deposits, unlike any other product.