Industry Webinar - Launching Redeemable CDs - A more robust and versatile approach to CDs скачать в хорошем качестве

Industry Webinar - Launching Redeemable CDs - A more robust and versatile approach to CDs

Unlocking the Future of Deposit Strategy: An Introduction to Redeemable CDs - March 26, 2025 Webinar In today’s rapidly shifting financial landscape, community banks and credit unions face a growing challenge: how to attract and retain deposits while managing interest expense and risk. As traditional deposit strategies begin to show their limitations, a new solution is emerging—Redeemable Certificates of Deposit (CDs). Redeemable CDs represent a next-generation deposit product designed to give institutions greater control over their interest expense while offering depositors meaningful new value. Introduced by Neil Stanley, CEO of The CorePoint, during this recent industry webinar, this innovative product provides a smarter way to manage CDs in a dynamic rate environment. The Challenge with Traditional CDs Traditional CDs lock in depositors with fixed interest rates and impose flat early withdrawal penalties—often a set number of days’ interest, regardless of how close to maturity the withdrawal occurs. This outdated approach, largely unchanged since the 1960s, fails to reflect market realities and prevents banks from managing their deposit costs dynamically. In the current rate environment—where institutions are carrying large volumes of high-cost CDs opened during rate peaks—many are struggling to unwind expensive positions. With interest rates now falling, a unique opportunity has emerged to improve both depositor experience and institutional profitability. The Redeemable CD Advantage The Redeemable CD introduces a market value-based structure. Rather than a fixed early withdrawal penalty, depositors are offered a daily redemption value based on a bank-set discount rate. If interest rates have fallen since the CD was opened, the bank may offer a bonus for early withdrawal—while still profiting from refinancing the CD at a lower cost. This simple change transforms the CD into a fixed-income equivalent, giving depositors yield and liquidity without exposing the bank to undue risk. It’s not a callable CD, nor a no-penalty CD. Instead, it introduces fair, market-aligned early withdrawal pricing that benefits both parties. Implementation and Marketing Institutions can implement Redeemable CDs in a “low-tech” way by offering a calculator (like those already in use at pilot institutions) on their website or mobile app, where customers can view their CD’s current redemption value. For a more integrated experience, banks can work with digital banking providers to embed this data into online banking platforms. From a marketing perspective, Redeemable CDs allow institutions to retain rate-sensitive customers without entering a rate war. This product also bridges the gap with wealth management, offering a compelling alternative to bond funds and treasuries—especially important as AI-driven financial advisors begin recommending products based on value rather than brand loyalty. A Strategic Differentiator The Redeemable CD is patented and proven, with a history of success in pilot programs and favorable regulatory reviews. As major banks begin to explore this model, early adopters among community banks and credit unions will gain a powerful competitive edge. In short, Redeemable CDs allow institutions to offer a smarter, more flexible product—enhancing customer loyalty, controlling costs, and modernizing the deposit portfolio for a new era.