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Likwidity Quarterly Q323

Welcome to the Q323 edition of the Likwidity Quarterly, where we review the past few months and examine the implications for Treasurers and other Finance Professionals. In this edition, we’ll look at some of the emerging economic trends around the globe as well as focusing on what’s in store for cash rates and bank deposits over the coming years.

Is Apple targeting bank deposits?

In Australia, household deposits make up approximately 45% of bank deposits and as the recently announced ACCC Inquiry demonstrates, banks are not paying sufficient interest on customer deposits. If the early success of Apple savings is anything to go by, they could (if regulations permit) provide a compelling alternative for household deposits and the reason is pretty obvious. They are paying a competitive interest rate. Simple.

So let the brain wander just a little. If Apple with their panache and unquestioned leadership in marketing achieve 10-15% success rate, could that mean banks could lose that same percentage of their core deposit base. What happens then? The scenario planning can begin. What would the impact be on overall rates/ corporates etc, and where does it end. Suddenly, Bank Deposits might become sexy and interesting. Likwidity aims to be a part of the future of deposits.

How TFF has benefitted banks

Recent record profits at the banks have highlighted what a distorted market has occurred in the last while and costing investors and depositors.

As John Kehoe of AFR had written recently. During Covid, the RBA implemented what must be the worst decision possible. Gifting the banks $200bn through the Term Funding Facility. "The TFF has become a wealth transfer from the public balance sheet to commercial banks and homeowners….

For those unaware of the TFF, the RBA basically gifted $188 billion to Australia's largest banks for 3 years at a rate of 0.1% during 2021, with the goal of supporting small businesses struggling during the pandemic. See:

So basically the RBA is lending money at 0.1% and borrowing it at 2.25%, the exact opposite of what a functional bank should be doing. And taxpayers are flipping the bill while the banks are simply gifted billions of dollars and depositors are not paid competitive rates.

Concentration Risk regarding Banks-How do you compare?

It seems like such a long time ago, but during periods in the Covid crisis, many banks were unwilling/unable to take on large deposits as they were overwhelmed with liquidity. Many clients had no banking options available to them.

The lesson we learnt was what should just be normal good business practice of diversification. Too many organisations only have 1-bank relationship and that creates a potential concentration risk. This is probably a good moment to ensure that your organisation adopts a multi-bank strategy to spread the concentration risk and also introduce new banking options. How does your organisation compare to your peers.

See our poll results over here (

Trends in Treasury Tech

The buzzwords in treasury tech (and pretty much everything else) are AI and Automation.

Whilst the use of both technologies is very much still in its infancy, there is the promise of something exciting for real-world treasury applications. In particular, AI is very good at optimisation problems, making it perfect for forecasting cash flows based on existing patterns, helping to inform decisions on how long to put cash on deposit.

That, of course, brings us to Likwidity. When it comes to actually executing the recommendations from AI, you’ll need a tool that will get you the best rates from the banks and perform all of the necessary reporting and logging associated with the deposit process. Likwidity offers more options, visibility, and efficiencies than any other tool and importantly, it’s the only independent and unconflicted platform, having rejected the bank-paid commission model used by everyone else.

Deposit Platform considerations

If you've been thinking about using a deposit management platform but you're not sure what to look for, here's a question you ought to ask:

Is the platform being paid a commission or fee by the banks? Unless the answer is an unequivocal "no", that's a serious red flag. It means that the platform has a conflict of interests, yours, and the bank's, and we know who's going to win that battle.

If you'd like to talk to Australia's only independent and unconflicted Deposit Management Platform, get in touch with us and find out more about how Likwidity can improve your cash management process.

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