Fintech provider poised to challenge the market for reciprocal deposits
Total Bank Solutions (TBS) announced today the creation of a new liquid reciprocal sweep feature for its Insured Deposit Programs (IDP), a cash sweep service providing clients the benefit of extended FDIC insurance and, for participating banks, an additional source of stable, diversified and cost-effective deposits.
TBS created the new feature in response to increased client demand for a more convenient way to facilitate the placement of reciprocal deposits in this growing market segment. Reciprocal deposits have gained increased attention among banks after the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”) which became law in the spring of 2018. For qualifying banks, eligible reciprocal deposits in amounts up to the lesser of $5 billion, or 20% of the bank’s total liabilities may now be classified as non-brokered.
The liquid reciprocal feature is unique because for the first time banks and their affiliated wealth management or trust divisions, will be able to choose whether to retain deposits, place eligible accounts into a reciprocal bank or place third party sweep deposits off balance sheet while providing extended FDIC insurance to their customers – all through one seamless solution.
TBS’s new Liquid Reciprocal feature offers a range of benefits for both banks and financial intermediaries including the added diversification of funding sources, improved security, increased scalability and access to an expanded network of banks for FDIC insurance.
As a complement to this service, TBS also offers the ability to monitor every FDIC insured bank and NCUA insured credit union in the U.S. for safety and soundness and reciprocal eligibility through the proprietary “Shadow CAMELS” analysis that is included as part of the proprietary TBS Bank Monitor® service. The new liquid reciprocal feature represents a way for firms to easily and confidently integrate the placement of reciprocal deposits as part of their overall cash sweep strategy.
“This is a sweep product at its core, operating continuously and offering full availability and daily liquidity,” stated Kevin Bannerton, Partner and CFO with Total Bank Solutions. “The liquid reciprocal sweep feature is another example of how we work with clients to add value by modernizing specialized business processes, helping to accelerate the digitalization of finance”.
The new feature will be available for existing clients effective June 1 and the firm plans a formal roll out beginning this summer.