The banking industry’s deposit strategies are changing to meet rising interest rates and potential market volatility. The 2024 Senior Financial Officer Survey (SFOS) conducted by the Federal Reserve emphasized the crucial role that internal auditors play in ensuring the effectiveness and compliance of these strategies.

Internal auditors are at the forefront of evaluating bank deposit strategies. Their role is crucial as banks adjust their deposit beta-setting approaches to respond to the interest rate environment. According to the SFOS, most banks are focusing on maintaining deposit balances. 76% of respondents aim to maintain deposit balances for wholesale non-operational deposits through their beta-setting strategies. This emphasis on stability amid economic fluctuations highlights the need for robust internal auditing practices.

The survey also underscores the importance of these strategies on recruitment and talent acquisition within the banking sector. As the demand for specialized knowledge in deposit strategies, regulatory compliance, and risk management grows, banks must enhance their recruitment strategies to attract and retain top talent in the internal audit function.

Recruitment and Talent Acquisition Implications

What does this all mean for hiring? As banks seek to strengthen their internal audit functions, they may need to attract and retain those with expertise in evaluating deposit-related risks and controls. This trend often leads to increased demand for internal auditors with specialized knowledge of deposit strategies, regulatory compliance, and risk management. Banks will need to review their recruitment strategies and compensation packages to attract top talent in this competitive market, emphasizing the need for specialized skills in deposit strategy evaluation and risk management.

Conclusion: Actionable Takeaways

To navigate the shifting landscape of bank deposit strategies effectively, banks should:

1. Leverage Internal Auditors’ Expertise: Regularly engage with internal auditors to review and refine deposit strategies, ensuring they are robust and compliant.

2. Stay Agile: Develop flexible strategies that quickly adapt to changing market conditions and regulatory requirements.

3. Invest in Talent: Enhance recruitment efforts to attract and retain auditors with specialized skills in deposit strategy evaluation and risk management.

By focusing on these areas, banks can better manage the risks associated with rising interest rates and market volatility, ultimately ensuring the stability and effectiveness of their deposit strategies.