Regional banks appear to have taken a hit in the opening round of the industrywide battle to gather deposits Over the past few days midsize banks such as Comerica Commerce Bancshares and M T Bank have reported notable declines in total deposits with M T in particular reporting a 6 drop from a year earlier Executives have offered a number of reasons why saying during earnings calls that business customers typically draw down cash early in the year to pay for employee bonuses Others simply looked on the bright side saying that a decline in commercial deposits is often a precursor to better loan growth as businesses use their excess cash to cover business-related investments Whats notable though is that the decline is distinctly a regional bank problem The megabanks with the exception of the embattled Wells Fargo reported strong deposit growth during the first quarter Its too soon to say of course whether the split between regionals and big banks is a momentary blip or a trend in the making But it nonetheless reflects a working theory about deposit competition that has recently taken hold Customers may be choosing the banks with the best technology rather than those that offer the best deposit rates That theory made an appearance during Comericas earnings call Tuesday when an analyst pressed executives on whether they are spending enough on tech to keep up with their competition Do you think you can compete at this size in the digital age of banking Steven Alexopoulos of JPMorgan Securities asked Or do you need to add more scale to ramp up that spend President Curtis Farmer responded by pointing out that the 72 billion-asset Comerica recently upgraded client-facing tech in its treasury management business The Dallas company also last year launched a new mobile app for consumers and it continues to make a slew of other improvements to its back-end technology he said Technology today is becoming more ubiquitous Farmer said without providing details on the companys tech budget We have really moved away from heavy customization to really leveraging key vendor relationships and more cloud-based technology It is unclear whether those investments have been enough to encourage depositors to stay put During the first quarter deposits in Comericas business banking unit fell 7 while retail deposits rose 1 Total deposits fell by just under a percentage point to 576 billion Questions about the value customers place on slick technology comes as the nations biggest banks have made no qualms about hiding the size of their tech budgets In the coming year for instance JPMorgan Chase e xpects to spend an additional 14 billion on technology the company said at its annual investor day in February That investment will fund what executives describe as the companys digital everything model including mobile-app upgrades and new back-office uses of blockchain So far those investments have coincided with increases in deposits During the first quarter total deposits rose 4 overall and 6 within JPMorgans retail bank Additionally the number of active mobile customers rose 13 to about 30 million Over the past year c ompany executives have suggested that splashy investments in tech could give them a leg up in the looming battle for deposits Customers value nice mobile features in the same way that they value better returns on their savings account Customer experience investments the convenience the brand the marketing the digital features all become increasingly important and customers are less price sensitive Marianne Lake chief financial officer at JPMorgan said during the companys quarterly call on Friday describing a theory of deposit-price competition that many people subscribe to Recent research underscores the emerging divide between big and small banks when it comes to deposit-gathering Between 2011 and 2016 the pace of deposit growth at industrys three biggest banks JPMorgan Bank of America and Wells Fargo was roughly double the pace at smaller banks according to Novantas the retail bank consulting firm It remains to be seen whether regional banks will gain momentum in their deposit-gathering if the Fed continues to raise interest rates and the industry begins to compete on price in a meaningful way During earnings calls over the past few weeks banks have said that day is likely just around the corner M T for instance has begun having more frequent conversations with business clients about moving excess cash balances into higher-yielding accounts Additionally on the retail side of the bank executives have just started to see a little bit of a creep on the local rates offered on 18 month CDs according to Chief Financial Officer Darren King You can definitely feel things are starting to get a little closer to when well see a turn King said during the Buffalo NY companys earnings call Monday During the first quarter Comerica boosted deposit rates in very strategic and targeted markets in response to upticks in local deposit rates CFO Muneera Carr said during the companys earnings call Tuesday She did not provide additional details JPMorgan meanwhile expects deposit rates on the retail side of the company to increase at a rapid clip once competition picks up though Lake said the company has not seen any signs that it will happen soon We havent changed our expectations on that but you know we havent seen it yet either Lake said I guess well all know when it finally unfolds Laura Alix contributed to this article