CD yields drop, FinTechs see innovation openings

By Vriti Gothi

The U.S. certificate of deposit (CD) market is signalling a cautious shift ahead of the Federal Reserve’s September 16–17 Federal Open Market Committee (FOMC) meeting. According to new research, nearly 74% of all CD rate changes recorded in August were decreases, pointing to heightened expectations of a Fed rate cut and the beginning of a potential monetary easing cycle.

This trend underscores how deposit products, particularly CDs, remain a frontline tool in how banks, credit unions, and increasingly FinTech-driven platforms navigate periods of rate uncertainty.

Despite the overall decline, 12-month CDs emerged as the clear outlier in August. They accounted for 26% of all rate increases during the month and delivered the highest average increase at 56 basis points, a notable jump from July’s 40 basis points. This suggests that even as most maturities adjust downward, financial institutions are maintaining short-term competitiveness to retain and attract depositors seeking safe, yield-bearing instruments.

For FinTechs and digital banks that operate leaner deposit models, the 12-month CD may represent a strategic product to differentiate offerings. By combining intuitive digital onboarding, transparent rate comparison, and liquidity flexibility, FinTech players could exploit this gap where consumer appetite remains relatively strong.

The findings are part of the Ratewatcher report from CD Valet, a digital marketplace tracking over 35,000 retail CD rates across more than 4,500 banks and credit unions. The platform’s scale allows it to uncover monthly patterns in CD pricing behaviour, offering stakeholders—from traditional institutions to challenger banks—data-driven insight into how market sentiment is evolving.

For August, the analysis clearly shows that while the majority of institutions are lowering yields in anticipation of looser monetary policy, pockets of competitive behavior remain. The 12-month CD is a telling example of how institutions are balancing rate strategy with liquidity needs.

What This Means for FinTechs

The evolving CD landscape presents opportunities and challenges for FinTechs:

1. Consumer Acquisition Through Deposit Innovation
   With yields declining, FinTechs can capture customer attention by offering bundled digital CD products—for example, laddering options or AI-driven comparison tools that maximize returns across institutions.

2. Building Trust in a Volatile Environment
   Declining rates can frustrate depositors accustomed to higher yields. FinTechs with transparent communication and easy-to-use dashboards can position themselves as trusted guides, particularly as consumers look to optimize savings strategies.

3. Leveraging Data for Personalized Offerings
   Just as CD Valet uses its marketplace data to identify patterns, FinTechs can apply predictive analytics and machine learning to deliver personalized deposit recommendations, enhancing stickiness and customer loyalty.

4. Strategic Partnerships
   Digital banks and FinTechs can collaborate with community banks and credit unions that may lack competitive distribution channels but still want to showcase attractive short-term CD products. These partnerships could broaden reach while strengthening FinTech platforms’ role in deposit intermediation.

As markets await the Fed’s September policy decision, the CD market offers a clear signal of how expectations are shaping deposit strategies. A rate cut would likely accelerate downward pricing across maturities, but short-term CDs may continue to attract competitive positioning.

For FinTechs, this is not simply a rate story—it is a customer acquisition and engagement opportunity. By leveraging digital agility, transparent tools, and consumer-centric innovation, fintechs are well-positioned to turn shifting CD trends into a competitive advantage.

In the months ahead, the key question will be how quickly institutions recalibrate after the Fed’s move and how FinTechs can differentiate themselves in helping consumers navigate a lower-yield environment with smarter, tech-driven savings strategies.