I think a relationship bank should measure funding concentration around the person or event capable of moving deposits, even when its formal account structure makes the balances look separate. Long customer tenure is useful context, but it is not evidence that money will remain available through a change in ownership, a large acquisition or a period of uncertainty. The commercial relationship and the funding behaviour need to be understood together. Neither treasury nor the relationship team can produce that understanding alone.
This is a difficult position for a bank that has built its identity around knowing customers. Asking whether a longstanding relationship might withdraw funds can sound like questioning the value of the relationship itself. I have heard that objection from capable bankers who understand their customers well. The right response is not to dismiss their knowledge. It is to make the knowledge specific enough that someone else can examine it, identify its limits and decide what the bank should do with it.
The account is not the decision-maker
In our own review, the first problem was the unit of analysis. Account records described legal entities and products. Relationship managers described owners, finance teams and connected trading businesses. Treasury scenarios described categories of balances. Each view was useful for its original purpose, but none by itself showed the practical decision that could move money out of the bank. A group might have several accounts, several authorised users and one person who ultimately decided where cash should be held.
We therefore asked three plain questions. Who can decide to move the balance? What business event would make that decision likely? What operational steps are needed to carry it out? These questions did not replace contractual information or formal liquidity analysis. They made it possible to challenge assumptions within that analysis. A deposit tied to payroll may behave differently from cash awaiting an acquisition, even when both sit in accounts with a long history. The current purpose of the balance matters.
Our questions did not always receive a substantiated answer. Some relationship managers were confident about a customer's intentions without having discussed the relevant event. Others knew of a possible transaction but had not considered its implications for deposit behaviour. We recorded those differences rather than converting every uncertain answer into a convenient classification. Where ownership or authority was unclear, we treated the uncertainty as a reason for further work. A neat dashboard is not worth much if its apparent precision comes from unresolved questions.
This also changed the customer conversation. We did not ask customers to promise that money would remain with us. We asked about their operating requirements and explained how the bank could support them. In some cases the conversation identified services that made the relationship more useful. In others it confirmed that a balance was temporary. Both findings improved our understanding. Calling every temporary balance disloyal would have confused a legitimate customer need with the bank's preference for predictable funding.
Make the economic choice explicit
Once concentration is visible, management still has to decide what to do. Diversification can raise funding costs, require investment in transaction services and reduce the income attached to a large relationship. Those consequences should appear in the same board paper as the risk benefit. Otherwise directors are asked to approve a direction without seeing the economic exchange. I want the finance team involved early enough to challenge both the cost estimate and the assumption that the new funding will behave differently.
At Fennervale Commercial Bank, we estimated an additional C$8.6 million in annual funding expense for the planned change in mix. That figure was not a prediction of the precise eventual cost. It gave the board a scale against which to judge the proposal. We also showed which part of the concentration reduction would come from broader deposit growth and which part required replacement or restraint. Without that bridge, management could have attributed a favourable percentage entirely to deliberate action when the denominator had also changed.
The commercial team had a legitimate concern about pricing. If we stopped matching every exceptional rate request, some customers might move balances and reconsider other business. I did not ask colleagues to pretend that consequence was immaterial. We agreed where the relationship justified a considered exception and where the bank should accept a smaller balance. Exceptions remained visible at group level. The discipline was to explain why a particular decision was sensible without allowing a series of individually plausible exceptions to recreate the original concentration.
There is a temptation to turn a concentration measure into a competitive score. A lower percentage can look unambiguously better even when the replacement balances are expensive or poorly understood. I resist that interpretation. The measure is a prompt for judgement, not a substitute for it. Directors should ask how the replacement funding was acquired, what behaviour has actually been observed and whether commercial incentives are encouraging staff to overlook new dependencies. A more dispersed register does not automatically describe a more resilient bank.
Revisit behaviour before the model is comfortable
The review cannot end when the policy is approved. Customer businesses change, ownership changes and digital access can alter the practical speed of a withdrawal. I want a regular discussion of material changes in behaviour and authority, including changes that have not yet affected balances. That discussion should be short enough to remain useful and specific enough to lead to action. A quarterly report that repeats the same reassuring description is less valuable than a small number of well-evidenced changes requiring a decision.
I also want to hear where the relationship team disagrees with treasury's interpretation. The disagreement may reveal information missing from the model, or it may expose confidence that is not supported by evidence. Either possibility matters. We should record the basis of the difference and decide how to resolve it. Requiring agreement before the issue reaches the executive meeting can remove precisely what that meeting exists to examine. A chief executive should be prepared to own a decision made under uncertainty rather than asking teams to manufacture unanimity.
Our largest twenty depositor groups fell from 38% of balances in December 2022 to 24% in June 2026. I regard that as evidence of a changed position, not proof that future withdrawals will be comfortable. The quality of the underlying information still needs attention. We must continue to ask whether the bank understands the commercial purpose of important balances and whether its response capacity matches the scenarios it discusses. The moment a successful programme becomes a settled story is often the moment its assumptions stop receiving useful scrutiny.
My practical recommendation to another chief executive would be to sit through one complete depositor-group review with treasury and a relationship manager. Follow the authority to move money, the customer's reason for holding it and the bank's response if it leaves. Ask which statements are observed, which are inferred and which have not been tested. That exercise will not produce a complete funding strategy. It may reveal whether the strategy rests on customer knowledge that the organisation can actually use.