Remember the liquidity crisis in the fall of 2008? That’s precisely the time when Canadian Tire Bank was looking to attract a quarter of a billion dollars in deposits. But that wasn't their only challenge. There was also no time (or budget) for retail advertising or promotion.
Despite these challenges Canadian Tire Bank managed to obtain a quarter of a billion dollars of deposits in 45 days. (see Financial Post story).
Canadian Tire Bank focused on the little-known market for nominee term deposits in Canada. With an estimated market size of approximately $100 billion in Canada, the market for nominee name term deposits is a reliable source of deposits for financial institutions that need increased liquidity as market opportunities arise. (Nominee term deposits are an increasingly important channel to source funds for loan products.)
The word nominee name (sometimes referred to as street name) implies that a customer’s securities and/or assets (in this case, term deposits) are held under the name of the brokerage firm. Although the name on the certificate is not that of the individual, they are still listed as the real and beneficial owner of the term deposit(s).
Term deposit issuers who participate in the nominee name term deposit market generally do so to fund loans or credit cards and know they can rely on the nominee term deposit market to rapidly increase liquidity, if required, and do so with low overhead, no retail operations, and no retail advertising. The Term Deposit Module within the Portfolio Plus banking software platform makes it easy to implement.
Brokers like to maintain a strong relationship with their clients. Nominee name term deposits ensure that the relationship with the customer is maintained with the broker, not the issuer. The process of acquiring term deposits for clients is also highly automated to the extent that the broker can re-register or transfer a term deposit to another issuer with ease. It makes the broker’s life easier and allows the client maximum flexibility, a winning combination. A broker can also ensure that the customers’ investments are spread over many issuers to maximize the total CDIC coverage.
Portfolio Plus Term Deposit module enables issuers to create automated processes to manage billions in nominee term deposits per year while also improving accuracy. The result is an operational efficiency that’s hard to rival in any other area of banking.
SIT could not have reached the level of success in the banking software market without being able to integrate with other systems (e.g. accounting, ERP, etc.). The interface complexity varies widely. Some customers use a simple delimited file to upload/download data while other customers have chosen real-time XML interfaces using industrial strength middleware. It’s your choice.
Give SIT a call. We’ve helped our customers raise billions in deposits with minimal overhead and expense. Our implementation track record is flawless and our customer references will gladly speak to that experience.
Questions? Call us.
This page was created and/or refreshed on April 24, 2017 @ 10:26:24
by Strategic Information Technology (SIT) Ltd., Stouffville, Ontario, Canada
The page subject is: Nominee Term Deposits