The Nomis Index Portfolio Impact Modeler for Savings is a simulation tool that models how changes in the target Fed Funds rate could impact a bank’s deposits balances and profitability depending on the pricing response by the bank and its competitors. The purpose of the tool is to illustrate the methodology behind Nomis’ Pricing Science. Any numbers or scenarios generated by this tool should be used for conceptual purposes only and should not be used to inform business strategy, pricing, or as an input to any model or tool to inform business strategy or pricing. Before you start changing your deposit rates, give us a call!


Input assumptions

  • Only considering the behavior of non-transactional liquid consumer deposit (i.e. savings and money market deposit) accounts
  • The initial portfolio size and interest expense estimates were derived from FDIC deposits portfolio data and should be used as a starting point for the simulation
  • The estimates for interest rate were derived from Informa data at a portfolio level and are used as a starting point for the simulation and don’t reflect the relative position of the bank across different markets, product, or balance tiers compared to its competitors
  • The parameters (e.g. pass-through %) are fixed across months and competitors behavior is fixed by the input parameters, not necessarily by the bank's choice in behavior. 
  • The estimated interest spread, used to calculate net interest income (NII), automatically varies from the starting value in Portfolio Working Assumptions field in the following ways:
    • It is automatically increased by an amount equaling the change in Fed Funds rate to simulate an assumed immediate change in FTP rate equivalent to the change in Fed Funds Rate modeled.
    • Any increase in interest rate paid for deposits is automatically deducted from the Estimated Interest Spread to model the cost of higher interest expense on profitability.
Modeling assumptions
  • Parameters and inputs to the tool are informed based on Nomis’ generic deposits model, not on your account level data. Before using outputs of any simulation to directly inform your pricing scenarios, the model needs to be recalibrated using your customers’ data to more accurately reflect your portfolio.
  • The models assume that the change in the deposits interest rate as a pass-through related to the change in Federal Funds rate is a one-time event and doesn't consider any multi-period pass-through strategy for the bank or its competitors.
  • The models do not consider potential external non-price drivers that may drive balance changes during this period (e.g., increased news coverage on changing deposits rates, increased marketing spend, or special promotional offers).
  • The models focus on the non-transactional liquid deposits portfolio and do not consider the potential effects of cross-cannibalization (either positive or negative) by the bank’s other products.
  • The models estimate and average behavior for the total portfolio level, not necessarily at a more granular (market, product, balance) which may behave differently than the norm.
  • The models don't make any adjustments based on potential changes in the deposit characterization due to portfolio or pricing changes.

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