Capturing migration dynamics in deposits - How migration modeling can help banks navigate shifts in customer’s product preferences

This whitepaper explores the crucial role of migration modeling in today’s rapidly changing deposit environment. As rising interest rates drive shifts in customer behavior, traditional deposit models fall short of capturing the full scope of migration dynamics. To remain competitive, banks need more forward-looking models that better reflect these shifts.

Identify possibilities to improve the effectiveness of your interest rate risk management, by evaluating these three approaches to capture deposit migration dynamics:

1- Separate migration models,

2- Interest rate-dependent volume modeling,

3- And using a single NMD profile for all deposit products.

Each method is assessed against suitability criteria such as simplicity, flexibility, and interpretability, helping banks quickly choose the most suitable approach for their needs.

By integrating migration modeling into deposit management, banks can better forecast changes in deposit flows, manage interest rate risk, and enhance liquidity strategies in today’s volatile market.

This whitepaper offers practical guidance on how to evolve your deposit modeling approach and stay ahead in a rapidly changing market.