The Quest for Deposits in Uncertain Times

Affluent customers and small businesses are driving growth in bank deposits at a time when the path of interest rates remains uncertain and inflation erodes the saving power of the mass market. Full-year totals on December 26 in ProSight’s State of the U.S. Deposit Market report showed deposit balances for 2025 higher than those over the same period in 2024.  

Small-business deposits grew more than expected behind a positive economy and new stimulus in last year’s Big Beautiful Bill. The segment also likely wants to maintain liquidity in accounts given future uncertainty, said Tom Hoscheidt, managing director of research at ProSight. 

“Generally business customers bring on higher overall balances, as a lot of their borrowed money goes into their business checking accounts for operating capital,” Hoscheidt explained. “If banks’ small business customers continue to borrow rather than use cash, balance growth will increase.” 

Last year’s Federal Reserve interest rate easing and an economy supporting wealth and income stability among higher net worth consumers were also positives for deposits. As the Fed lowered rates, small businesses opportunistically borrowed working capital and stashed loan proceeds in deposit accounts, while affluent customers paused amid heady market gains to re-balance some investments into cash. 

That said, the rate of growth is slowing as continued uncertainty on the course of Fed interest rate policy stymies further business borrowing and leads banks to hold on deposit rates to compete in an increasingly crowded market. 

“Banks are hesitant to lower the rates they pay because there is so much competition now for deposits,” Hoscheidt said. During the last Fed easing cycle of 2018-19, banks were quick to lower rates because there were fewer alternatives such as money market funds for parking money and earning a return. 

Hoscheidt expects deposit growth to pick up again if the Fed resumes easing. When rates are lower, depositors tend to keep money with their primary financial institution instead of putting it in alternative investments. This is especially true when the Fed Funds rate drops below 2%, he said. 

When and if Fed easing will happen is anyone’s guess. With inflation hovering above the Fed’s 2% target rate, and jobs growth tenuous, the Fed is trying to stimulate growth without overheating the economy.       

Controlling inflation is key to restoring savings among mass market consumers. For much of 2025, deposits among these customers declined dramatically as higher prices for everything from food to fuel cut into disposable income. An uptick in unemployment “isn’t helping things either,” said Hoscheidt, as many continue to live paycheck to paycheck.  

Attracting Affluent Households 

For banks, though, the mass market is a smaller piece of the deposit growth puzzle. While it accounts for half of all U.S. households, the mass market represents just 11% of deposit balances, according to ProSight Banking Outlook: 2026 Trends research. Wealthy households, meanwhile, hold 61% of deposits, and will continue to drive growth as their wealth increases and they re-think how to allocate it among investment alternatives. 

“Wealthy households have done well in the stock market these past few years,” Hoscheidt noted. “When their cash gets low, they tend to rebalance and save a little more. They spread that cash among several banks, so all their deposits are FDIC-insured.” 

When they do, deposit institutions want to be ready. While young consumers with proportionately less money are driving growth in new accounts, older, wealthier consumers are pushing balance growth, which is why banks are eager to offer cash incentives for checking, said John Rountree, head of client engagement at ProSight. 

“There are a lot more incentives now for new checking accounts along with bundled offers for savings and money market accounts, so that banks acquire the balances with those wealthier consumers because they’re more important for the overall growth and health of their deposit franchise,” he said. 

And they have other strategies at their disposal. Larger banks tend not to compete on rates, but rather on convenience and inertia. More branches mean greater convenience, leading to more checking-account deposits. This primacy creates deposit stability, which enables them to offer lower rates, Hoscheidt said. 

Direct or online banks that tend to fund higher yield credit, such as credit card and car loans, can afford to be more aggressive on rates, as can regional banks that tend not to have as many primary accounts as larger banks, Hoscheidt said.  

Community banks often lack the scale and convenience of larger banks and tend to target business customers more so than everyday consumers, so they are less focused on rates, he said. They also try to draw in affluent business owners by providing a high level of customized service.  

At Atlanta-based Pinnacle Financial Partners, with assets of $119 billion, specialty deposit programs are part of the bank’s DNA, said Rick Arthur, executive vice president, consumer, small business and specialty deposits. 

Currently Pinnacle has more than 10 specialty deposit programs, including providing deposit and cash management solutions for owners and advisors that form captive insurance companies; offering products to property management and homeowners associations; running a deposit escrow portal for businesses managing escrow accounts; and helping law firms with treasury and cash management. 

It combines a focus on small business, middle market, and corporate banking with industry expertise to attract small businesses in niche industries, while cultivating relationships with affluent and high net-worth customers with expert advice and customized service. “Having trained experts putting the right products before our customers is important to expanding our relationships,” Arthur said. “We also remove internal silos and bureaucracy, so we can offer more streamlined service.” 

Pinnacle also relies on word of mouth to lure more depositors and hires seasoned bankers from the industry who can bring clients and assets with them to the bank. “We pursue a net promotor and referrals strategy to build our deposit base and draw new depositors to our bank,” Arthur said.  

Pulling the Right Levers 

If recent history is a guide, adding new customers to increase deposits will be an uphill battle. Instead, banks that succeed will do so by broadening and deepening their deposit relationships with existing clientele. 

“Checking balance growth coming from attracting new households will be limited, as checking and checking household growth has been limited in recent years and will likely continue to be limited in the future,” Hoscheidt said. “CDs will remain in the mix for those banks who need deposits but will become more and more muted as rates continue to decline.” 

In a separate survey of 1,000 respondents in ProSight’s 2026 Banking Outlook, 44% of consumers said they were optimistic about their personal finances improving in the near future, down from 53% in 2024. While more this year (37%) than last (34%) believed the economy would improve, slightly fewer (34% vs. 35%) believed they’d have excess deposits to invest. 

“For most consumers, if they had excess money, they were not going to do a whole lot differently,” Rountree said. “More likely they were going to pay down any credit card balances or other debt with any excess deposits they have.” 

Some consumers might move money around, either chasing higher rate deposits or bringing money back into the bank for potential security and/or a different return profile as rates continue to come down, he said. 

Even so, primacy remains an important factor. Across all ages in aggregate, consumers hold more than half of their total balances at their primary financial institution; older age groups hold close to 70%, Rountree said. As interest rates decline, the incentive for consumers to chase yield decreases. More money returns to primary financial institutions, a trend that should continue—assuming rates continue to come down in 2026. 

Younger consumers with less experience in financial services are gettable, he said. 

“Maybe they started out with a digital bank or fintech and over time their needs have evolved, but they’re much more likely to plan to switch,” Rountree said. 

“Whereas Gen X and boomers have an established primary bank and it would take something to disrupt that relationship, for them to consider switching.” 

While moving to another city or state used to be a huge driver of switching financial institutions, that’s now less important because people just aren’t moving as much due to the tight housing market, he said. 

“But even if you do move, chances are you can continue to still bank with many of institutions digitally, and many of the banks have done quite a bit in terms of expansion of their footprint with new branches and with acquisition activity,” Rountree said.