Optimization Services
Market Rates Insight is a leader in optimization services for financial institutions. We provide three unique optimization categories that will help you focus on your most significant competitors in each market, achieve the greatest positive impact on balance with the lowest cost of funds, and establish the appropriate “market area” in accordance to FDIC rules and regulations.
Competitor Optimization
Why do you need to optimize your competitors?
Not all competitors are alike. Your most significant competitors are those that have a cause-and-effect rate relationship with your institutions. By identifying these significant competitors, you will be able to anticipate their rate movement based on your rate changes.
MRI can help you optimize your competitors so that you will know, in each of your markets, which competitors are likely to change their rates and to what extent. This knowledge will help you anticipate the likelihood of a competitor’s rate change based on your changes using historical data.
What do you need to do to optimize your competitors?
All we need from you is the list of your competitors for each of your markets. We use advanced statistical analysis to determine the type of rate-relationship (random or cause-and-effect) you have with each one of your competitors.
Price Optimization* Basic
Why do you need to optimize your pricing?
Price optimization helps you achieve the highest impact on your balance at the lowest possible cost of funds. In other words, what is the lowest possible rate that you can offer to achieve the highest level of balance?
MRI can help you optimize your rates on the Micro level*, i.e., the optimal pricing point for a given product based on the shift in your competitors’ rates. For example, for every 10 basis points that you price your product above bank “A,” your balance will be positively impacted by $3,500,000.
What do you need to do to optimize your pricing?
All we need from you is the list of products and markets that you would like to optimize, and the corresponding weekly balances for the last 26 weeks. We use advanced statistical analysis to measure the impact that your competitors have on your balance for the selected products and markets.
* The analysis consists of Micro variables such as competitive rates and balances, but does not include Macro variables such as Prime Rates, T-Bills, and other economic indicators.
FDIC Market-Area Optimization
Why do you need to optimize your market area?
FDIC Rules and Regulations clearly state that every adequately capitalized, under capitalized, and de novo banks must comply with rule 337.6. This rule defines the method of competitors’ selection, as well as a limited of 75 basis points above the prevailing rate.
The FDIC defines “market area” over and above geography, applying the following definitions:
“...rates offered by any one insured depository institution soliciting deposits in that area may affect the rates offered by other insured depository institutions operating in the same area.” (12 C.F.R. 337.6(b)(2)(ii).
“...the market area will be determined pragmatically, on a case-by-case basis, based on the evident or likely impact of a depository institution's solicitation of deposits in a particular area…” (12 C.F.R. 337.6(b)(4).
So to protect yourself in the event of an audit, you need to be prepared to justify your rates against your market area as defined by the FDIC.
What do you need to do to optimize your Market area?
All we need from you is the list of your competitors in each of your markets. We use advanced statistical analysis to determine which of your competitors may affect or impact your institution.
