Jin Rong Jie·2025-12-15 09:54Core Viewpoint - The year-end deposit competition among small and medium-sized banks is intensifying, with various innovative strategies being employed to attract deposits through higher interest rates and targeted incentives [1][2]. Group 1: Deposit Strategies - Small and medium-sized banks are launching a variety of deposit campaigns characterized by "limited time, targeted, and tiered" strategies, including higher interest rates and promotional gifts [1][2]. - Yilian Bank has reintroduced its previously sold-out two-year fixed deposit in a "limited edition" format, requiring customers to increase their assets to qualify for purchase [1]. - Jiangsu Bank offers a three-year fixed deposit with an annual interest rate of 1.9%, which is 15 basis points higher than standard products, along with tiered rewards for referrals [1][2]. Group 2: Customer Targeting - Shanghai Bank's deposit promotions are specifically aimed at new funds and new customers, extending the activity period until the end of Q1 2026 [2]. - Wenzhou Bank provides tiered gifts based on deposit amounts, while Shanxi Dayao Rural Commercial Bank offers exclusive rates for new customers, with a maximum annual interest rate of 1.67% for three-year deposits [2]. Group 3: Risks and Concerns - High-cost liabilities pose a significant risk to bank operations, as the competition for deposits leads to increased interest rates that compress net interest margins [3]. - The phenomenon of "deposit rush" can create liquidity risks due to the volatility of funds, with deposits often surging at month-end and withdrawing at the beginning of the month [3]. - Customer participation in these deposit activities may lead to multiple threats to their rights, including penalties for early withdrawal and potential risks to personal information security [3]. Group 4: Underlying Issues - The deposit rush phenomenon is linked to deeper issues in bank performance assessment, internal control, and liability structure [5][6]. - Performance assessments that prioritize end-of-period deposit levels encourage short-term deposit behaviors, while internal controls often fail to adequately monitor compliance with deposit regulations [5][6]. - Many small and medium-sized banks rely heavily on high-interest deposits due to a lack of stable local customer bases, leading to high overall liability costs [5][6]. Group 5: Solutions for Improvement - To address these issues, banks should focus on five key areas: restructuring performance assessment systems, strengthening internal controls, deepening local customer engagement, optimizing liability structures, and leveraging technology for management [6]. - A shift from quantity to quality in performance assessments is essential, with a focus on average daily deposits and the introduction of quality metrics [6]. - Developing a stable local customer base and offering low-cost deposit options can help reduce reliance on high-interest deposits [6].