November 7, 2023 | Stamford, CT — One third of U.S. small businesses and mid-sized companies are planning to shift deposits from their current banks to a new provider and they are not considering minor adjustments: Almost 60% plan to shift at least half their balances. Among mid-sized companies planning to shift deposits, three quarters plan to move half or more of their deposit balances to a new bank. 

The latest Greenwich Market Pulse shows that U.S. small businesses and mid-sized are motivated by a mix of rates, risks and service. More than half of companies planning to shift deposits are doing to access better rates. As interest rates have risen sharply, banks and non-bank providers have hiked the rates they pay on deposits to varying degrees. The resulting differential is creating opportunities for companies to access sometimes significantly higher deposit rates by switching providers. 

Approximately 30% of small businesses and mid-size companies that are planning to shift balances say they are doing so to minimize risk, and another roughly 10% say they are moving deposits due to concerns about the stability of their current banks. 

“Small businesses and mid-sized companies in the U.S. are increasingly willing to move deposits from their current banks to secure valuable benefits in the form of better rates on deposits, reduced risk and improved service,” says Chris McDonnell, Head of Community, Commercial and Digital Banking Analytics at Coalition Greenwich.

Companies Not Fleeing Regional Banks
Despite recent turmoil among regional banks, companies planning deposit moves are not necessarily fleeing regional providers. About 30% of companies planning to move balances expect to place them at a national bank. However, almost the same share of companies plan to move deposits from their current provider to a regional bank. About one in five companies plan to shift deposits to a community bank or credit union, with the same share planning to move balances to non-bank financial service providers. Approximately 15% expect to move deposits to a super-regional bank. 

Of the U.S. small businesses and midsize companies that switched bank providers, 70% made the change due to dissatisfaction with their bank representative and loan pricing.

“The top consideration for companies seeking a new bank is financial stability and better customer service,” says Chris McDonnell. “Banks who commit themselves to delivering top-quality service can minimize losses of deposits and commercial banking clients.”