Thanks. The real value of core deposits to an acquirer is that they come from customers who aren't price-sensitive and thus can hopefully be sold other products. In contrast, borrowers may be there for relationship reasons, but also could be there because the loan is underpriced or this was the only bank stupid enough to lend to them.
Hi Corpus, thanks for your comment. Just to make sure I'm understanding, you're saying that because the customer is price-insensitive, they are likely to remain a customer of the bank long enough that the bank can cross-sell and turn them into an even more profitable customer?
That's the goal. If depositors aren't customers for price reasons, then there's a lot of inertia holding them there. That's less true for borrowers who may have reasons other than price to be customers.
Thanks. The real value of core deposits to an acquirer is that they come from customers who aren't price-sensitive and thus can hopefully be sold other products. In contrast, borrowers may be there for relationship reasons, but also could be there because the loan is underpriced or this was the only bank stupid enough to lend to them.
Hi Corpus, thanks for your comment. Just to make sure I'm understanding, you're saying that because the customer is price-insensitive, they are likely to remain a customer of the bank long enough that the bank can cross-sell and turn them into an even more profitable customer?
That's the goal. If depositors aren't customers for price reasons, then there's a lot of inertia holding them there. That's less true for borrowers who may have reasons other than price to be customers.