By Susan Cosgrove
For years, deposit competition was largely driven by pricing, where higher yields, promotional offers and convenience determined where customers placed their money. Deposit insurance was important, but it largely operated in the background — something customers assumed was there rather than something institutions actively discussed.
That assumption has changed. In today’s partner banking environment, trust, transparency and demonstrable deposit protection are increasingly shaping where funds flow and which institutions win.
In a recent R&T Deposit Solutions survey of 200 senior banking as a service and fintech executives nationwide, 74% said access to expanded FDIC deposit insurance coverage is highly important to winning and retaining deposits.
Customers are asking harder questions about where their money sits, how it’s protected and whether institutions can clearly explain those protections. Regulators, meanwhile, are demanding greater visibility into how deposit programs are structured and managed.
What was once viewed as operational infrastructure is now becoming part of the customer value proposition.
Deposit safety has moved to the front office
The rapid growth of embedded finance and partner banking models has accelerated customer expectations around transparency and security. Consumers and businesses increasingly want to know not only where their funds are held, but also how those funds are protected.
The regional bank disruptions of 2023 accelerated that shift. They reminded the industry that confidence can move more quickly — and so can deposits.
Those disruptions and recent failures increased fintech leaders’ focus on deposit protection. Among BaaS executives, 96% reported they have already adopted a deposit insurance platform, such as deposit placement, sweep, and access to expanded FDIC insurance programs.
That adoption rate suggests modern deposit infrastructure is no longer viewed as just an operational requirement. It’s becoming central to growth, customer trust and operational resilience.
In BaaS, trust has to be established quickly across sponsor banks, fintech partners, regulators and end users. Institutions that can explain protections plainly and bake that transparency into onboarding, reporting and customer communications create a real advantage: a trust dividend.
That advantage can translate into faster acquisition, stronger retention and deeper partner confidence.
Regulatory expectations continue to rise
At the same time, regulatory expectations continue to shift rapidly. Nearly half of survey participants said regulatory expectations are evolving faster than operating models can adapt, while more than half of fintech executives cited regulatory uncertainty as a top near-term challenge.
Regulators are emphasizing stronger third-party oversight, clearer visibility into funds flows, auditability, customer disclosures and operational resilience, especially in complex partner banking models.
Even so, most executives remain confident: 8 in 10 said their current deposit insurance approach would hold up in a bank failure scenario.
As a result, many organizations are pulling deposit infrastructure into the broader business strategy. Modernization is being driven not only by compliance considerations, but also by growth, partner expectations and evolving customer demands.
Customer expectations are becoming more dynamic
One of the clearest findings from the survey was how executives expect customer behavior to evolve over the next year. Nearly three-quarters anticipate greater sensitivity to where funds are held, and 57% expect increased customer willingness to switch providers.
The implications are clear for banks and fintech firms alike: customers are more informed, more mobile and more focused on how their money is protected.
Institutions that can’t plainly explain protections risk losing customer trust, even if they are competitive on rates or features.
But when protection is verifiable, embedded in onboarding, statements, dashboards and communications, institutions are better positioned to reduce risk and earn loyalty.
Rates still matter. They’re just no longer the whole story.
What comes next
Three practical moves can help banks and their partners compete in this new environment:
Operationalize transparency. Make it easy for customers and partners to see where funds are held and how coverage applies throughout the life cycle of the deposit, not just at account opening.
Build for scale and scrutiny. Pair pricing strategy with deposit infrastructure that can grow without creating blind spots around oversight, reporting or control testing.
Use regulatory readiness as a differentiator. Governance, resilience and auditability aren’t just compliance tasks. They help keep programs, partners and customers confident as organizations scale.
The market is moving toward a future where trust is a measurable competitive asset.
The next deposit leaders won’t be defined only by who pays the most. They’ll be the institutions that combine safety, transparency and operational resilience into a model customers can verify and regulators can examine.
That’s the trust dividend, and it’s reshaping the competitive dynamics of partner banking.
Susan Cosgrove is chair and CEO of R&T Deposit Solutions.
