Setting ISA Target Balance

Automating a Target Balance for Insured Sweep Accounts

NBID strives to provide bank partners with maximum flexibility for structuring customer accounts within the deposit network. A common point of inquiry is whether a $250,000 balance must be maintained in the client’s account to participate. This minimum balance requirement is ultimately up to the bank team to decide, and fully configurable on the bank’s core and/or via SFTP.

For guidance on how to automate these sweep and target balances for your clients' Insured Sweep Accounts, please refer to the NBID Configuration Guide specific to your core provided by ModernFi, as well as the SFTP Configuration Guide here. If your core manager has any questions after reviewing this documentation, your ModernFi Account Manager is happy to set up time to provide further direction and support.

When setting up Insured Sweep Accounts with target balances, partners typically choose from the following structures:

Zero-Balance Sweep Accounts

In this setup, any customer funds that are placed in an Insured Sweep Account (ISA) are automatically swept into the network daily (on days the allocation is run), bringing the ISA balance back to zero. This approach enables our partner banks' depositors to easily define what balances they want allocated throughout the network. Generally, this ZBA approach will also require a Linked Operating Account or Companion DDA for the depositor’s day-to-day cash management needs. These Linked Operating Accounts are usually defined as part of the standard Terms & Conditions depositors agree to in the Account Agreements as they open their ISA.

Peg (Target) Balance Accounts

Some banks prefer to retain a specified balance on their books in the ISA for day-to-day cash management needs. This peg balance is usually set at $250,000 in the customer's ISA to maximize insurance coverage and immediately available liquidity. This means that if the customer's ISA balance goes above $250k, the bank’s system will automatically trigger a daily sweep to allocate those funds throughout the network. If the customer withdraws funds from their ISA (e.g., by writing a check), then the bank’s system will automatically request those funds back from the network. ModernFi will only satisfy withdrawal requests for funds that are currently allocated in the network. This structure preserves a consistent balance is readily available for the customer’s day-to-day cash management needs, while still offering additional security on funds above the target.