Navigating Non-Maturing Deposits: Insights from our latest survey
By navigating the complexities of non-maturing deposits banks can seize opportunities for profitability and better capital allocation
Navigating the landscape of Non-Maturing Deposits: Insights from our survey conducted in spring 2025
Diamond and Dybvig were awarded the Nobel Prize in Economics in 2022 for their research on banking dynamics, particularly the risks associated with depositors demanding instant access to non-maturing deposits (NMDs). That same year, rising interest rates brought NMDs back into focus, sparking competition among banks for deposits and concern among supervisors.
Supervisors know from painful experience, and the Diamond-Dybvig model, that NMDs should be modelled and managed. Regulatory expectations are clear but non-prescriptive, leaving banks to determine their own best practices. Furthermore, careful modelling allows for improved capital allocation and it provides the potential to optimise customer margins and maintain profitability in alignment with the strategy of the bank. Modeling of NMDs creates a range of options and choices to be made. One place to start, is to benchmark your own current practice.
The recent Deloitte survey, conducted in spring 2025, provides insights into the strategies and challenges faced by 23 European banks spanning 14 countries. This survey highlights the diverse approaches to modelling NMDs, reflecting the varied balance sheet sizes and compositions of these institutions as well as the wide range of modelling choices covering data samples, segmentation, methodology as well as forecasted time spans
Understanding Non-Maturing Deposits
Non-maturing deposits are unique in that they lack a pre-defined maturity date, allowing depositors to withdraw funds at any time. This characteristic poses significant liquidity and interest rate risks for banks, necessitating sophisticated asset liability management. The heightened competition for deposits, driven by rising interest rates since 2022, has prompted banks to enhance their deposit offerings. Even though central banks started to cut rates in 2024, interests levels are up compared to the low for long era and the competition is likely to remain. This competition is further intensified by digital bank-like offers, which makes it easy to move deposits.
Survey Findings: A Diverse Approach to NMD Modelling
Diversity in modelling approaches should be viewed in light of a plethora of different motivations and targeted benefits, such as regulatory compliance, earnings stability (hedging), liquidity outflow estimation, and capital management.
The survey reveals how banks employ statistical models to estimate deposit behaviours, with a focus on mitigating risks associated with interest rate fluctuations and liquidity demands.
The survey categorises banks into groups based on balance sheet size. It uncovers a range of modelling techniques and data treatment methods used to manage NMDs. Medium banks predominantly utilise regression analysis and trend analysis to identify stable components within their deposit base. Additionally, very large banks include expert-based pass-through rates to manage their liabilities.
Banks are also navigating regulatory scrutiny and investor expectations, particularly concerning asset liability management and interest rate risk. The survey reveals that banks are increasingly adopting sophisticated deposit management strategies, focusing on customer intelligence, personalised campaign execution, and technology integration.
The question is how this aligns with the overall strategy of the bank. At least the diversity underscores the importance of tailored strategies to address the unique challenges posed by NMDs.
Future Directions: Optimizing Deposit Management
As banks strive to optimise their deposit management strategies, the survey suggests several key areas for improvement. These include
- enhancing customer intelligence
- refining product innovation
- upgrading customer experiences
By focusing on strategy, customer intelligence, personalised campaigns, and technology, banks can navigate the complexities of NMDs and seize opportunities for profitability and better capital allocation.
