#4078: Finastra's Pete Longo Shares Deposit Trends for Small- to Mid-Sized FIs...

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Pete Longo, VP of Product Management at Finastra, stopped by the show to discuss the latest deposit trends for small- and mid-sized financial institutions.

Pete shared how today’s deposit landscape is changing right before our eyes. He addressed what’s going on here and how this change is affecting credit unions and community banks, as a growing amount of cash is now being held in payment and lifestyle apps rather than traditional accounts.

Pete provided three aspects of why this trend is occurring:

1. The “aging out” challenge: how both younger and older demographics are moving money away from banks in favor of app-based ecosystems.
2. The digital experience divide: the widening gap between traditional user interfaces and the expectations of a generation raised on instant, intuitive platforms.
3. Building frictionless digital journeys: how Finastra helps institutions modernize their core and payments systems to create seamless experiences that attract and retain deposits.

We asked Pete about the worse case scenario if this trend continues -- solidifying the significance of this issue for traditional FIs.

Lastly, Pete reiterated what credit unions and community banks can do to retain and attract the next generation of depositors for further longevity.

Q&A summary
What are the current deposit trends affecting small and mid-sized financial institutions, particularly credit unions?
The deposit landscape is rapidly changing, with digital brands and lifestyle apps attracting deposits away from traditional credit unions, making it challenging for them to serve their communities effectively.
What is the 'Aging Out Challenge' in the context of credit unions?
The Aging Out Challenge refers to the demographic shift where older members with brand loyalty are passing wealth to younger generations who may not have the same loyalty to credit unions, leading to potential loss of deposits.
Can you explain the 'digital experience divide' and its implications for credit unions?
The digital experience divide highlights how lifestyle apps provide a seamless, user-friendly experience that traditional credit unions struggle to match, potentially leading to a loss of younger customers.
What strategies can credit unions adopt to compete with lifestyle apps for deposits?
Credit unions can enhance their digital offerings by focusing on hyper-personalization, creating frictionless user experiences, and leveraging technology to meet the needs of younger members.
How does the 'great wealth transfer' affect the financial landscape for credit unions?
The great wealth transfer presents both an opportunity and a challenge for credit unions, as they must adapt to attract younger generations who will inherit wealth and may prefer digital solutions.
What role does branding play in attracting younger customers to credit unions?
Branding is crucial for credit unions to create recognition and trust among younger customers, who are drawn to modern, engaging experiences offered by lifestyle apps.

Check it out and let us know your thoughts. And be sure to watch the entire episode below for all the details.