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Customers Say Goodbye to Traditional Banks: $60 Billion Withdrawn in Q1 2023

Customers Say Goodbye to Traditional Banks: $60 Billion Withdrawn in Q1 2023

Three major US banks have experienced significant deposit outflows as customers seek higher returns on their savings.

In Q1 of 2023, almost $60 billion of deposits were withdrawn from Charles Schwab, State Street, and M&T. Charles Schwab saw the largest outflow, with depositors withdrawing $41 billion in just three months.

State Street’s deposits fell by 5%, while M&T Bank’s deposits dropped by 3%. The outflows have been attributed to the low-yield environment of traditional bank accounts, prompting depositors to seek higher-yielding opportunities like money market funds or Treasury bills.

The current US average interest rate for savings accounts is 0.24% APY, while short-term Treasury notes yield over 5%. The collapse of Silicon Valley Bank and other lenders has further accelerated the movement of cash out of US banks, with customers seeking safer alternatives for their deposits.

Signature Bank also recently closed its doors after losing approximately $17.8 billion in deposits.

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In addition to the low-yield environment, the Financial Times reports that the Federal Reserve’s tight monetary policy has contributed to the deposit outflows.

The Fed’s benchmark rate of 4.75% to 5% has driven customers to withdraw their savings and seek higher-yielding opportunities elsewhere.

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.

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