F0112: Funding Cost Benchmarking Framework

Context

Context: benchmarking funding costs against peers surfaces competing views of average funding cost, spread to benchmark, and deposit mix ratio and often mixes inconsistent peer disclosures, rate curve, and liquidity premium. A repeatable frame makes the cost reduction versus funding stability explicit and keeps the decision auditable. Without it, teams cycle through the same arguments and lose time.

Options

• Option A: Maintain the current approach to minimize disruption, accepting slower gains.
• Option B: Pilot changes in phases, validate results, and scale after thresholds are met.
• Option C: Redesign the approach end-to-end for larger gains with higher execution risk.

Decision

Decision: Choose Option B. Run a staged rollout that validates average funding cost, spread to benchmark, and deposit mix ratio against thresholds and pause if assumptions break. Assign owners, document constraints, and set a review checkpoint to avoid drift.

Rationale

Rationale: Option B balances cost reduction versus funding stability while preserving flexibility if conditions move. It allows the team to test peer disclosures, rate curve, and liquidity premium and protect against the main risk: over-reliance on volatile funding sources. Phasing improves buy-in because progress is visible and accountability is explicit. Peer comparison surfaces actionable targets for mix improvement.

Risks

• Weak data quality can obscure changes in average funding cost, spread to benchmark, and deposit mix ratio and delay corrective action.
• Execution drag may extend exposure to over-reliance on volatile funding sources, eroding the intended benefits.

Next

Next: Confirm ownership, finalize the baseline for average funding cost, spread to benchmark, and deposit mix ratio, and document peer disclosures, rate curve, and liquidity premium in a shared log. Schedule the first review, define stop conditions, and communicate the plan to affected teams.