For two years, the assumption inside most asset-liability committees was simple: once rates started coming down, deposit pricing pressure would fade and cost of funds would drift back toward normal. It hasn't worked out that way. Heading through 2026, the fight for funding is still the defining challenge on the balance sheet — and the reasons are structural, not cyclical.
Money that left for money-market funds and high-yield digital accounts has proven remarkably reluctant to come home. And the depositors who stayed learned something in the process: rates are shoppable, and switching takes minutes on a phone.
The "stickiness" assumption is breaking
Core deposit studies still classify most consumer balances as low-beta, non-maturity funding. But much of the behavioral data behind those models was collected in a world without instant account opening and rate-comparison alerts. Institutions that have re-run their decay analysis on recent data are consistently finding effective durations shorter than their models assume. If your ALM framework still treats checking balances as if it's 2015, your interest-rate risk is probably understated.
What's actually working in 2026
The institutions holding funding costs below peer medians this year tend to share three habits:
- Segmented pricing, not blanket specials. Instead of repricing the whole book to defend a slice of at-risk money, they target offers to the specific balances most likely to leave. It's more analytical work, but it protects margin.
- Primacy over rate. A member with direct deposit, bill pay, and a debit card decays far more slowly than a rate-chasing CD — and, crucially, that relationship is measurable. Growing primary-account relationships is the most durable funding strategy there is.
- Discipline on the way down. The ability to cut promotional rates quickly, as the market allows, matters more than the discipline to avoid raising them in the first place.
- Knowing their deposit beta. They actually measure how much of each rate move passes through to their cost of funds, by product and by segment, so pricing decisions are grounded in data rather than gut feel — and so surprises show up in a report, not in the quarterly results.
Deposits are a portfolio, not a byproduct
The mental model that keeps costs down is treating deposits as a managed portfolio rather than a passive result of "great service." That means knowing, at a segment level, which relationships are price-sensitive, which are relationship-driven, and which are quietly at risk right now.
We used to compete with the bank across the street. Now we compete with every rate a member sees on their phone.
That comment — from a CFO at a mid-size credit union — captures the shift. Deposit competition is no longer local, and branch density, once the moat, now mostly determines your cost base.
Don't ignore the operational side
Pricing gets the attention, but the leakiest part of many deposit strategies is onboarding. If a new checking relationship takes days to fund or dies in a clunky account-opening flow, no rate will save it. The institutions winning primary relationships have made opening and funding an account genuinely fast — because the deposit you never lose is worth far more than the one you had to buy back with a special.
What to do this quarter
Three concrete moves for the next 90 days: re-run your decay assumptions on post-2022 data and feed the results into ALM; build a simple segmentation that flags at-risk balances so pricing can be surgical; and instrument your account-opening funnel to find where new relationships stall. None of this requires new core technology. It requires treating funding as the strategic priority it has quietly become.
