Eighteen months ago the consensus was a gentle glide path: policy rates would ease, deposit costs would follow, and net interest margins would settle a little below their 2023-24 highs. That is not what happened. The European Central Bank cut its deposit facility rate from a peak of 4.00% in September 2023 to 2.00% in June 2025, then reversed course, raising it to 2.25% in June 2026 and 2.50% in September1. With energy-driven inflation rising to 3.2% in May, the ECB described the June decision as robust across a range of scenarios for the Middle East shock2. The US Federal Reserve followed in September, lifting its target range by 25 basis points to 3.75%-4.00%, its first increase since 20233.
The round trip in euro rates
ECB deposit facility rate at selected decision dates, % (%)
Note: Rates effective from the dates shown.
Source: European Central Bank, “Key ECB interest rates” (2026)
For bank treasurers, the whiplash is the point. A franchise built on the assumption of a single, predictable cycle will misprice deposits on the way down and on the way up. The period "after the peak" turns out not to be a destination but a regime of higher volatility, in which deposit behaviour and pricing discipline matter more than the level of rates.
Margins are compressing at the global level
One global review estimates that the global net interest margin slipped from 1.65% in 2024 to 1.63% in 2025, even as US, Japanese and UK banks widened margins by 9, 7 and 6 basis points respectively5. In the US, FDIC data show the industry NIM at 3.32% in the second quarter of 2026, up 6 basis points on a year earlier, with domestic deposits growing 0.8% for an eighth consecutive quarterly increase6. Industry analysis noted that US net interest income improved by 4% in the first half of 2025 after a decline in 2024, while the average cost of interest-bearing deposits fell to 2.5%7.
These aggregates hide how sensitive earnings are to small behavioural shifts. One estimate holds that net interest income makes up about two-thirds of global banking revenues, and that 22% of US banks' pre-tax income could be at risk from a relatively small disruption to loan and deposit rates8. Another analysis is sharper still: of roughly $70 trillion of consumer deposits globally, about $23 trillion sits in checking accounts paying zero or close to zero interest9. If just 5-10% of those balances migrated to top-market rates, industry deposit profits could fall by 20% or more9.
Loyalty is fragmenting, one transfer at a time
The behavioural data point the same way. J.D. Power's 2026 US Retail Banking Satisfaction Study found that the average checking customer now maintains three deposit accounts at different institutions, and that 20% of customers moved money away from their primary bank in the previous three months, up from 17% a year earlier4. The customers most likely to move are precisely the ones banks most want to keep.
The most valuable customers are the most mobile
Share of US retail bank customers who moved money away from their primary bank in the past three months, by segment, 2026 (%)
Two structural forces will accelerate this. The first is AI. The same analysis warns that consumer-side AI agents able to compare rates and sweep idle balances in real time could reduce global banking profit pools by around $170 billion, or 9%, if business models do not adapt9. The second is stablecoins and tokenised money. One estimate puts more than $1 trillion of US bank deposits at risk of displacement by stablecoins, while noting that the GENIUS Act, passed in July 2025, prohibits payment stablecoin issuers from paying interest7.
Our view: in a world of agent-driven rate shopping, inertia stops being a strategy. The deposit you keep will be the one attached to a relationship the customer actually uses.
What the primary relationship is really worth
The primary relationship, where salary lands and bills are paid, is the most defensible source of low-cost, operational deposits. It is also the hardest to win, because it is earned through everyday usefulness rather than headline rates. Banks that treat deposit pricing as a product-level rate card will overpay for hot money and underinvest in the relationships that bring stable balances.
- Customer-level deposit economics. Price on the full relationship, including operational balances, product holdings and churn propensity, rather than on the product alone.
- Smarter beta management. Segment and re-price quickly in both directions; the 2026 reversal rewards banks that can move rates for specific cohorts within days, not quarters.
- Fee income that is not rate-dependent. Payments, cash management, wealth and advice. Industry research reports AI lifting wealth-management fee income by more than 30% at early adopters10.
- Primacy by design. Salary switching, bill management, real-time payments and useful insight inside the app, the features that make the bank the operating account.
Planning for more than one rate path
The practical implication is to plan for scenarios, not a forecast. The Fed's September projections pointed to one further rise in 20263, but the reversal of 2025's cuts shows how quickly consensus can change. Asset-liability committees should stress deposit behaviour, not just rate levels, including faster migration driven by AI agents and new digital money. Finance teams need the ability to re-run net interest income and customer profitability views in hours, so that pricing decisions are informed by current data rather than last month's close.