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Setting Up New Deposit Products

  • Updated on 15 Nov 2018
  • 13 minutes to read

Create a new deposit product

To create a new product:

  1. Navigate to** Administration > Products > Deposits >**
  2. Click New Deposit Product
  3. Enter all the product's terms and conditions, as described below.
  4. Click Save Product .

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Relationship between deposit products and deposit accounts

Just like loan products and accounts, deposit accounts are linked to a deposit product that has been previously created. For that reason, the terms and constraints you define when creating a deposit product will define all of the deposit accounts created under it.

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Types of deposit products

Mambu provides five types of deposit products, each with a set of terms you can customize according to your organization's needs.

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Current Account

A Current Account is like a regular savings product, but also allows for Overdrafts. Choosing this option will allow account balances to go negative up to a certain limit.

Savings Account

A Savings Account product, will allow you to create accounts where clients can make deposits and withdrawals when they wish. The interest is posted at the frequency you choose and accrued over time. Doesn't allow overdrafts.

Fixed Deposit

In Fixed Deposit products, clients make deposits to open the account and can only withdraw the money after an established period of time. The account can't be closed or withdrawn before the end of that period.

Savings Plan

In a Savings Plan, the client makes regular deposits into the account but can only withdraw the money after the maturity period is reached.

Funding Account

A Funding Account product is used to enable the funding of P2P lending.


Product availability

These settings allow you to customize the availability of a product. By default, products will be available to individual clients and groups/companies in all branches. To restrict access to individuals or groups, uncheck the appropriate box.

To specify individual branches, uncheck the box next to All Branches and the Branch field will display. Click in the Branch field to choose from a list of branches. Begin typing the name of a branch to filter the results. To remove a branch from the list, click on the red delete icon to the right of the branch name.

product availability section with checkbox for All branches uncheck and Berlin branch displayed with red delete icon


Account ID settings

The ID setings allow you to customize the IDs for all deposit accounts which will later be created under this product.

Random pattern

This is the default option and if you choose it, when you create a new loan Mambu will automatically generate an ID using the format you define.

By default, the template used will be @@@@###, in which @ represents a letter and #, a number. So in this case, Mambu would generate IDs like ABCD123, GHJE321 and so on.

You can change this pattern to any other sequence of numbers and letters you wish. To setup a random pattern select the option from the menu > use a sequence of @ and # to define your pattern.

Incremental number

If all your account IDs follow a certain incremental sequence you should choose this option.

To define your loan's IDs with sequence numbers select Incremental Numbers > enter the number you want the sequence to start from.


Currencies

Mambu allows defining deposit products in various currencies and performing transactions on the accounts in that currency.

In order to support a deposit account in different currencies, the currency has to be added under Administration -> Currency and the Exchange Rate must be set.

Setting up the same product in different currencies

If you need to have the same product available in different currencies, you can make a copy of the original product and enable the desired currency for each. Please take note that when copying a product and changing the currency all the amount limits and restrictions on the account keep the same numerical value, therefore they have to be adjusted for the new currency.

For example

Product "Savings" is created in USD, and you set up below amount limits on the product:

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When copying the product and selecting Euro as the new currency, the limits will keep the same numerical value:

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The new limits and amount settings have to be manually adjusted if the same value is desired in the organisation base currency, or you can customize the limits for each currency. In the above example you can set up the Maximum Withdrawal Amount to 891 Euro (based on an exact conversion of USD to Euro) or you can round it up to 900 Euro, depending on your internal policies.

Please be Aware
This applies for all amount limits and restrictions, so it is very important to update all sections (if defined): Deposit & Withdrawal limits, Fees, Overdraft Limit, Tiered Interest Rate (tier values), Opening Balance.

Account Transactions

Withdrawals & Deposits

All transactions will be performed in the account currency (defined at product level). If an exchange rate between the base currency and the deposit account currency is not defined under Administration (Currencies), then the transaction will not be allowed. A backdated transaction is also not allowed if the exchange rate was set after the date of the desired backdated transaction.

Transfers

When posting a transfer, only the loan and deposit accounts that use the same currency as the target deposit account will be available.

Disbursing a loan to a deposit account

Only the deposit accounts that have the same currency as the loan (the base currency) will be shown.

Tellers transactions

Tellers can post transactions using only the organization base currency. Teller users will be allowed to transact only on accounts that use the base currency. When posting transactions on other currencies, an error message will be displayed: Tellers are allowed to post transactions only on accounts managed in {base currency}. Only the accounts that have the base currency, will be visible in the tellering widget.

Reports

All reports will be displayed in the organisation base currency. When converting a transaction from a foreign currency to the base one, the exchange rate available in the transaction entry date will be used. When converting an account amount from a foreign currency to the base one, the current exchange rate will be used.

Accounting

All journal entries will be performed in the organisation base currency. The accrued account interest and overdraft interest will be converted to the base currency when logging daily and monthly interest accrued in accounting.

Conversion rates:

  • Positive interest accrued: Buy Rate

  • Negative (overdraft) interest accrued: Sell Rate

Client overview

The Accounts Summary will display each account in its own currency, but the Totals will display the total in the organisation base currency (after performing conversions for the balances in other currencies). The same applies for the Max Savings Balance widget under Closed Accounts.

Custom views

The amounts displayed in custom views will be in the account currency. You can also customize your view by selecting "Currency" as filter, or as column.


Interest Rate

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Click the Interest paid into account checkbox if you would like your product to pay interest. A screen with options will display. Each option is described in more detail below.

Interest Rate Terms

Deposit accounts can have three different interest rate term options: Fixed, Tiered per Balance, and Tiered per Period.

Fixed

The interest rate remains the same regardless of account balance or age.

Tiered per Balance

Usually used in savings accounts that pay interest at increasingly higher rates as the account balance increases. Each tier consist of a range of account balances and interest rates earned by the customer If his or her balance falls within that range.

For example, the first tier may include balances of $0 to $5,000 and pay 1% interest; the second tier may include balances of $5,000.01 to $10,000 and pay 3% interest, and the third tier may include balances of $10,000.01 to $25,000 and pay 5% interest

interest rates section showing the 3 tiers described above

Interest is applied on the total deposit balance, according to the respective balance tier.

Calculation example: Screen Shot 2018-11-13 at 14.37.21.png

Tiered per Period

Using the Tiered per Period option, you can select for each tier a time period in which an associated interest rate percentage will be applied according to the age of the deposit account. When interest is accrued on the account, Mambu will determine the interest rate from the tier that matches the age of the account.

Interest Rate Tiers table showing interest rates increasing from 1% to 3% to 5% after 1, 30, and 60 days, respectively

How is the interest rate charged?

This option lets you choose how often the interest is accrued. Available options include % per year, % per month, % per 4 weeks, % per week, and % per X days.

How is the interest rate charged? drop-down menu with options

Interest rate constraints

Applies to Fixed interest rates only
You can specify upper and lower limits for a fixed interest rate, as well as a default rate.

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When creating accounts in this product, you will see the default rate pre-filled into the Interest Rate field, however any number between the Min and Max values can be entered.

What account balance is used for calculations?

Deposits and withdrawals on an account will cause the balances to vary between two postings of interest. As such, you can choose whether the interest will be calculated on the Minimum daily balance, Average daily balance, or End of day balance. What Account Balance is Used for Calculations? dropdown with options

When is the interest paid into the account?

This setting is used to determine how often interest will be posted into the account. Options include: monthly on the 1st; weekly, biweekly, monthly, and quarterly from account activation date; and On Fixed Dates. options for when interest paid into the account

On Fixed Dates
If you choose On Fixed Dates, specify the dates using the Month and Day of Month fields that display. Click the green plus sign to add another date.
Please Note
The When is the Interest Paid Into the Account setting also defines the application of negative interest on Overdraft accounts.

Days in year

Here you can choose between different day count conventions for calculating your interest. Available options include: Actual/365 Fixed (365 days), Actual/360 (360 days), and 30E/360 ISDA (30/60 German). Days in Year drop down with options


Withholding taxes

It is a regulatory requirement in many countries that organizations offering deposit accounts have to pay taxes on the interest paid on those accounts to clients - these are generally called "Withholding Taxes" because they are deducted from interest paid out to the client. 

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The option under this section allows you to enable the withholding tax functionality - by checking the "Apply withholding taxes" checkbox under Interest Rate section (see screenshot above).

Please Note
The checkbox is visible only when "Interest paid into account” is checked and only if there is at least one Rate Source of type "Withholding Tax" defined under the "Rates" menu (see more in Customizing Your Account -> Taxes.

Once the taxes are enabled, the actual applicable tax will have to be specified at account opening - see more in Creating a Deposit Account

After interest is applied on the account, Mambu will post a “Withholding Tax” transaction on the account, that will subtract the tax percentage of the applied interest, from the account balance. 

Notes:

  • This option can be disabled even if there are accounts opened in the product; if taxes are disabled, new accounts won't have applicable taxes, but the old accounts will retain them.

  • If the product has accounting enabled, then a "Taxes Payable" Liability GL Account has to be linked and will be used for booking the amount of taxes withheld and due to the government.

  • The tax percent, source name and amount are available as placeholders in your contracts, receipts and templates.


Deposits and withdrawals

In a savings account and saving plans you can determine if there should be a Recommended Deposit . The amount entered there will only serve as a guideline and not as a constraint. The client will still be able to make deposits that fall under or above that value.

Maximum withdrawal

On the other hand, the Maximum withdrawal amount determines an exact value beyond which the client won't be able to withdraw money.

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Opening balance

In a Fixed Deposit product you can determine a minimum amount that clients will have to deposit before starting the maturity period.

Please Note
This is a mandatory field, but you can always enter 0, in which case the maturity period can begin with the first deposit transaction.

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Term length

For Fixed Deposits and Savings Plans products, you can define the period of time that goes from the account opening till the maturity date, when the client can withdraw the money.

To define this period's length,enter the default, minimum and maximum values > click on the dropdown menu > choose the time unit: months, weeks or days .

During the term length no withdrawals can be made unless the user is an administrator or has the Make early withdrawal permission.

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Internal controls

Under this section you can choose to automatically set accounts as Dormant after a number of days, where there has been no financial activity on that account other than posting of interest. Funds can be claimed by the owner or beneficiary at any time even if the account is in a Dormant state.

One advantage of using this option is that it will reduce the risk of incorrect reports and it will help you select the clients that are active in the system but with no activity on their accounts and then decide a course of action.

Please Note
This option is available for all types of deposit products, however, the system will not set an account to Dormant if it has a maturity date (Fixed deposits and Savings Plan products)


Product fees

There are three different types of fees you can setup when creating a deposit product and later apply to deposit accounts. For more details on each type of Fee, please read the article Fees.

Arbitrary fees

These are fees which can be applied manually to the accounts at any point during the loan's lifetime and with any given amount. To activate arbitrary fees you should check the box.

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Pre-defined fees

These are also manual fees but for which you already know the amount or percentage to be applied. To set up a predefined fee, click on Add Fee > enter the fee's name > enter the amount.

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Monthly fees

These fees are automatically applied to the accounts after being setup in the product.

To define monthly fees, click on Add Fee > click on Trigger > Monthly Fee > enter the amount > choose the method for calculating the day when the fee will be applied > Save the Product.

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Accounting rules

If you want to link your products to accounting, you should enable accounting > select the appropriate GL account for each action.


Overdrafts

Please see the dedicated article for Overdrafts.