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During periods of high interest rates, direct bank growth has often been buoyed by strong CD growth. That’s because the more competitive rates direct banks offer on CDs have been able to attract rate-seeking customers from traditional FIs. This phenomenon was especially evident in Q3 2024, where some direct banks at the time were still able to offer CD rates starting with a 5% handle and CD acquisition at direct banks was more than 50% greater than that of traditional FIs, according to Curinos Deposit Analyzer benchmarks.
But since the Federal Reserve embarked on its series of rate cuts throughout the latter quarters of 2024 and 2025, overall money in motion has fallen. With the best CD rates now hovering around 4%—not far from competitive rates on high-yield savings—direct banks, by the end of 2025, saw their CD acquisition fall by 70% from their 2024 peaks. That was far larger than the 40% decline experienced by traditional banks (see chart).
CD Acquisition as a % of End Balances
Traditional vs. Direct Banks | Q3 ’24 – Q4 ’25
Source(s): Curinos Consumer Deposit Analyzer, Curinos Analysis | Note(s): Simple averages displayed. Consumer balances only.
The upshot? In a new lower-rate environment where money in motion has slowed and high-yield savings rates are now more competitive, the prior playbook of focusing on high-rate CDs will no longer work as well for direct banks. Continued success in deposit gathering, for any institution, will hinge more on the overall strategy for the full product lineup and less on high-rate CDs alone.
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