Despite the brief five-day banking crisis in 2023, corporate finance executives continue to grapple with concerns over deposit safety and potential bank failures. According to Ampersand's latest Depositor Priorities Survey, nine out of ten senior managers involved in deposit administration express worries about near-term risks. The financial landscape remains volatile, with experts predicting hundreds of banks could be at risk due to various factors such as rising interest rates and heavy reliance on uninsured deposits. This article explores how these concerns are reshaping corporate finance priorities and what banks must do to adapt.

The survey, conducted in December 2024, revealed that while economic indicators were generally positive, fears of bank failures persisted. Experts had previously highlighted vulnerabilities in regional banks, which culminated in the collapse of Republic First Bank. Key issues included unrealized losses on investment securities and significant exposure to uninsured deposits. As a result, depositors now prioritize liquidity and security more than ever before. They seek assurances that their funds will be accessible when needed and protected by robust cybersecurity measures.

These heightened risks have prompted a shift in depositor behavior. Approximately 70% of respondents have already made changes to their deposit strategies. Common adjustments include transferring funds to larger banks, utilizing deposit protection products, and diversifying assets across multiple institutions. However, switching banks remains challenging due to existing loan agreements, additional costs, service disruptions, and complexities associated with current banking relationships. These obstacles highlight the need for more flexible and secure banking solutions.

Beyond safety, depositors also value alignment with their personal and organizational values. Environmental, social, and governance (ESG) principles have gained prominence, particularly among younger generations like Gen Z and Millennials. Many are willing to accept lower returns—ranging from 1% to 25%—in exchange for greater deposit security and values-based banking products. This trend underscores a broader shift towards seeking financial partners who not only provide safety but also support ethical and sustainable practices.

In response to these evolving needs, banks must undergo significant transformation. Financial institutions should focus on offering enhanced security features, flexible services, and strategic alignment with depositor values. By prioritizing these aspects, banks can better meet the demands of corporate finance leaders and build trust in an increasingly uncertain financial environment. Ultimately, the future of banking lies in becoming a reliable partner that supports businesses while ensuring the safety and accessibility of funds.