| Product
|
Problems
|
The ICS Solution
|
| Money market mutual fund sweeps / Short-term bond funds
|
- There is nothing comparable to FDIC insurance for money market mutual funds or short-term bond funds
- Deposit amount taken off balance sheet
|
- Offer access to multi-million-dollar protection that is backed by the full faith and credit of the federal government
- Keep the full amount of customer funds on balance sheet
|
| Repo sweeps / Collateralized deposits
|
- Eligible assets required
- Assets must be marked-to-market
- Pledging requirements reduce asset liquidity
- Cost and administrative burden affect profit potential
|
- Reduce ongoing collateralization and tracking burdens (when customers adhere to program limits)
- Improve margins by reducing collateral requirements
|
| Letters of credit / Private insurance
|
- Tend to be more expensive
- Generally require collateralization
|
- Take advantage of a significantly cheaper alternative (other cash-management alternatives tend to be more expensive)
- Reduce ongoing collateralization
|
| Other deposit sweeps
|
- Provider limits pricing discretion
- Provider may not offer full (dollar-for-dollar) reciprocity
- Provider may require bank to manually track withdrawals
|
- Set the interest rate you offer
- Benefit from full reciprocity
- Automatically track withdrawals and other customer information online via the Depositor Control Panel
- Work with a low-cost provider
|