Comparison to and conversion from other network providers

What is NBID's value proposition compared to existing reciprocal deposit networks?

1. NBID is the first bank-owned and managed reciprocal network. Participating banks are the owners of the NBID LLC. Member banks earn revenue share from the network in proportion to their flow in the network, in addition to advantageous pricing. In addition, NBID is managed by its board of bank directors, ensuring industry alignment and oversight. The novel structure of NBID drives significant financial benefits for member banks and ensures they have ownership over their critical infrastructure.\
   

What is the difference between NBID and ModernFi?

1. NBID is a standalone company that is owned by its member banks. NBID has selected ModernFi, a financial services firm, to be the first operator of its deposit network. ModernFi provides and operates the reciprocal network technology and infrastructure, alongside its custodian Northern Trust.\
   

What is the ROI of NBID?

1. The ROI of NBID can be significant for institutions that utilize reciprocal deposits. The financial impact is driven by significantly lower pricing on deposits placed in the network, as well as the 50% revenue share for member banks.
2. An ROI calculator is provided here where you can enter your FDIC certification number to see the specific impact of NBID for your institution. In broad terms:
   1. An institution that reciprocates roughly $1 billion a year may be paying their existing reciprocal deposit network around $1 million annually for the service
   2. With NBID, not including the revenue share, that would be closer to $200,000 from the basis point fee
      With the revenue share included, that $200,000 will be closer to net zero price for the institution
3. The ROI for an institution will depend on their usage and utilization of the network, so we expect it to grow over time. The most successful NBID members take a longer-term view of ROI, recognizing it will take time to ramp up their usage of the network. They calculate ROI on a multi-year horizon, and over a 2-3-4-5 year horizon, the ROI of NBID becomes significant compared to not making a change with their existing deposit network. A high-level ROI calculator, which can be customized to your institution by changing the FDIC Cert number at the top, can be found here: NBID ROI Calculator\
   

How should we roll out NBID alongside our existing reciprocal network? Do we need to replace our existing network?

1. Most NBID member banks already utilize an existing reciprocal deposit network. NBID is intended to be rolled out alongside your existing network, not as a replacement. We anticipate partners will grow volume in NBID over time and transition depositors as they feel comfortable and as the network scales. To reiterate, there's no need to replace or remove your existing network at this time. In terms of rollout:
   1. Get onboarded: Execute contracts, complete diligence, onboard and operationalize the program. Ensure everyone is trained, both from the operation side and client-facing side.
   2. Start with net new clients: Most institutions are preparing to roll out NBID with net new clients below the $10 million insurance limit that NBID will have initially. Starting with net new clients is easier than transitioning existing customers.
   3. Focus on manageable client sizes: Keep client sizes manageable given the initial insurance limits. This typically includes small businesses, high-net-worth retail customers, and smaller commercial and public funds clients.
   4. As the network grows, it will be able to handle larger existing clients that can be transitioned over, including larger commercial, nonprofit, and public funds. We anticipate NBID partners will transition the majority of their clients over time due to NBID's more attractive financial structure.\
      

Which depositors are better suited for Modern Fi versus our existing reciprocal network?

1. In the long term, we anticipate NBID member banks will utilize NBID for the vast majority of their reciprocal services. This is because it provides much better financials in terms of lower pricing, revenue share, and bank representation for the company. However, to start, because NBID is launching with lower insurance limits ($10 million initially), institutions have a range of options. Most institutions are planning to roll out NBID with net new clients below the $10 million insurance limit. Net new clients are an easy place to start since you don't have to transition existing clients. Keeping the size manageable will ensure clients remain within NBID's starting limits. Suitable initial clients typically include small businesses, high-net-worth individuals, small nonprofits, and smaller public funds and commercial clients. Over time, as the network scales, this can be expanded to larger commercial clients, public funds, nonprofits, and existing clients.\
   

Can we run NBID concurrently with our existing reciprocal network and for how long?

1. Absolutely. The vast majority of NBID partner banks already utilize an existing reciprocal deposit network. NBID is not designed nor intended to "rip and replace" your existing network. It's meant to be implemented gradually alongside your existing network. In terms of how long the programs can run concurrently, they can do so for as long as you would like. However, we expect the vast majority of NBID banks to transition most of their clients to NBID over time due to its more attractive financial structure, including better pricing and revenue share.\
   

What exactly is involved in migrating an account? What are the impacts on our depositors?

1. Migrating an account from an existing reciprocal network into NBID is straightforward. The main action items for you and your clients are:
   1. The client must sign a new Terms and Conditions document provided by NBID (which your institution can review and mark up as needed)
   2. After execution, you will transition their funds from the existing reciprocal network account into the new NBID account. Operationally, this means:
      1. Fully withdrawing the funds from their existing reciprocal network account back to your institution
      2. Moving those funds into their new insured sweep account
      3. Moving the funds into the NBID program account at your institution, where they will be pulled into the network and reciprocated or insured as applicable
      4. You will also give your client access to view their balances, statements, and allocations. If your institution is using NBID's integrated approach, clients will see all information through your existing digital banking experience on web and mobile. If you are using a non-integrated approach, NBID will provide you (and you will provide your client) with a login to a third-party client portal to see this information.\
         

What kind of ongoing operational differences should we expect between NBID and our existing provider?

1. NBID operates very similarly to existing reciprocal deposit networks and was designed to provide familiarity in operational execution while further reducing manual work for both your institution and clients through advanced technology. For your institution, operationally it will look quite similar:
   1. Funds are moved from your institution to the network custodian, and from there, placed at receiving institutions to provide insurance
   2. Your institution will receive at most one wire or one wire drawdown per day, depending on whether funds are coming into or out of the network
   3. If you are reciprocating funds, no wire needs to be executed that day
   4. Your team will have access to an institutional admin portal to manage accounts, view accounts, change accounts, manage wires, manage transactions, and view statements
   5. Money movement, reporting, and accounting (whether automated or manual) will be similar to what you have today
2. For clients, the experience can be either similar or improved, depending on your preferences:
   1. NBID has a standalone client portal where clients can see balances, allocations, and statements
   2. NBID can also integrate into your existing digital banking setup, so clients can see balances and allocations directly within your existing web and mobile applications\
      

If we are using both NBID and an existing network, how do we ensure one customer's funds are not placed at the same member bank?

1. Many NBID member banks already utilize multiple network providers, so this is an existing, long-standing, and solved issue. The key is ensuring you are not placing the same client in multiple networks because the insurance is not additive. To reiterate, you must simply ensure that your clients are either being placed in the NBID network OR your existing reciprocal deposit network, not both. As mentioned above regarding rollout, a clean approach is:
   1. Route net new clients below $10 million to the NBID network by default
   2. Transition existing clients over time due to better financials, at your discretion and timeline