As we close out 2024, the Ampersand team wanted to look back on the top deposit-related stories and topics of the year and provide some insight into where these issues are headed in the new year.

Top 5 Cash Management Stories of 2024

1. Depositors Lose Money in Bank Failure – The First National Bank of Lindsay failed this October. Depositors with funds in excess of $250,000 were provided access to 50% of those deposits by the FDIC and were also directed to contact the FDIC for further information. Bank failure fears are still very real across the US, with over 55% of corporate financial leaders expressing concern over bank failures according to Ampersand’s 2024 Depositor Priorities Survey.
2. Commercial real estate exposure and the risk of bank overspecialization: Fed Chairman Jerome Powell brought this issue to the forefront during congressional testimony in March 2024, noting that there “will be more bank failures” and that banks with high commercial real estate concentration may be more at risk. This is significant as banks continue to concentrate on specific industry verticals to differentiate amid ongoing competition for deposits.
3. The Synapse failure: The high-profile failure of middleware provider Synapse sent a shock through the fintech world, raising questions about deposit safety and the challenges faced by banks and fintechs when working together.
4. Proposed rulemaking around brokered deposit classification: In the wake of the Synapse failure, which left thousands of customers without access to their deposits, regulators struggled to find a solution to prevent similar outcomes in the future. The FDIC proposed significant rule changes regarding classification of deposits, which may not be a solution – and in fact could hurt community banks.
5. FDIC’s proposed recordkeeping requirements: In the fall of 2024, the FDIC proposed new recordkeeping requirements, which they felt would address some of the issues exposed by the Synapse failure. Namely, this new requirement will require banks to maintain detailed records of the beneficial owners of custodial deposit accounts. While this improves traceability, it also introduces new hurdles for already regulated entities.

What’s’ Coming in 2025

1. Less FDIC rulemaking: With a new administration entering the White House in 2025, there is likely less potential for additional rulemaking as it relates to brokered deposits and/or recordkeeping around custodial accounts. Incoming FDIC leadership will likely concentrate on topics like overall bank safety and stability and capital requirements and be less inclined to over-regulate the banking sector.
2. Greater focus on community banking: The Trump administration has publicly shared plans to focus on growing the American economy and supporting small businesses. As such, we expect a greater spotlight on community banks to ensure they are equipped to meet the needs of their communities.
3. A Comeback for Opportunity Zones: There is strong potential for focus on opportunity zones to make a comeback, leading to greater potential for EB-5 investment as well as general real estate development. Parking these project funds with community banks will provide greater community impact overall.
4. The Return of Regulatory Sandboxes: After the Synapse failure, regulators are looking for ways to strengthen bank and fintech partnerships, and make them safer. Regulatory sandbox programs that were championed during the first Trump administration may return to promote fintech growth while keeping customer funds safe.
5. Technological innovation in deposit management: As banks adapt to new rules and operational challenges, there will likely be an increased focus on leveraging technology to enhance recordkeeping, deposit management, and customer experience.

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