"The fragmentation of deposits has been going on for so long. And it really came to a head with what was called the banking crisis, you know, over the past couple of weeks because fundamentally, we just don't have the same relationships with our customers or members that we used to have." - James White
Top three key insights in this article:
- Leverage data and technology to anticipate and address customer needs with relevant solutions.
- Use the minimum required data elements to drive actions, instead of getting overwhelmed by vast amounts of information.
- Shift focus from primary financial institution (PFI) status to becoming the primary transaction account (PTA)
Deposit growth is a crucial component of any financial institution's long-term success. In today's rapidly evolving financial landscape, banks, credit unions, and fintechs need to stay ahead of the curve and embrace innovative strategies to attract and retain customers.
In this article, we will explore insights from industry leader, James White, General Manager of Banking at Total Expert, from his conversation with James Robert Lay on the Banking on Digital Growth Podcast.
Together, they discuss ways financial institutions can adopt a strategic approach to deposit growth. By incorporating these expert perspectives, your organization can confidently pave the way towards a more prosperous future.
Embrace the Concept of Proactive Trigger Outreach
One of the critical elements of a successful deposit growth strategy is proactively identifying and addressing the needs of your customers.
According to James Robert, "It's about identifying those triggers that lead to a deposit, whether it's a life event, a change in spending habits, or a change in income."
By analyzing customer data and recognizing these triggers, financial institutions can provide timely and relevant offers, advice, and support to help customers make sound financial decisions.
James emphasizes the importance of focusing on a few key data points to drive action while gradually building momentum.
"Take the minimum required data elements in order to act on it… it doesn't take as much; you don't have to direct API into Chat GPT, four or five, in order to get the right message to the right individual at the right time."
James Robert compares this process to using a "couch to 5k app," Financial brands should first aim for the 5k, then the 10k, half-marathon, and eventually the marathon.
All the while building confidence along the way.
"The confidence begins within… it's having the faith in ourselves, in our teams, in our organization, in our technology stack that yes, we can actually do this proactive trigger outreach."
Focus on Onboarding and Rewarding Customers
A vital aspect of deposit growth is not only attracting new customers but also retaining existing ones.
James highlights the importance of onboarding new customers effectively.
"Around 40% of your customers, if not onboarded properly, will leave within the first year, because they're only there as a transaction versus any kind of relationship."
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Financial institutions should ensure customers are engaged in the "stickiest" products and services to increase customer loyalty and long-term retention.
Aim to become the primary transaction account (PTA).
In the past, financial institutions aspired to become a customer's primary financial institution (PFI).
However, with the increasing competition and variety of options available, James Robert suggests focusing on becoming the primary transaction account (PTA) instead.
This approach provides banks and credit unions with valuable transactional data that can be used for targeted marketing, personalized offers, and a better understanding of customer behavior.
Furthermore, James believes that financial education and empowerment can be a long-term deposit strategy.
"I personally believe it's your responsibility to help ensure that your customer or member is financially healthy."
By providing account holders with the tools and resources they need to make informed financial decisions, institutions can foster trust, loyalty, and long-term relationships.
James Robert Lay highlights the significance of customer experience, stating, "It's not just about the product or the service; it's about the experience that the financial brand delivers."
By prioritizing customer experience and continuously refining it, financial institutions can attract new customers and retain existing ones, contributing to deposit growth.
Overcome Roadblocks by Taking Action
One of the most significant challenges financial institutions face is inertia.
To overcome this roadblock, James suggests that leaders "get off the couch" and start taking action.
"Identify those one or two big rocks that are stopping you from moving forward, and then break them down into smaller, manageable pieces."
By focusing on achievable goals and continuously taking action, financial institutions can create the momentum needed for deposit growth.
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In addition, the rise of fintechs has changed the financial landscape, and many community banks and credit unions are viewing them as a threat. Instead, James Robert emphasizes the opportunities to collaborate with fintech partners.
"The financial brand can leverage the fintech's technical expertise, and the fintech can leverage the financial brand's trust, credibility, and customer base."
By joining forces, both parties can benefit and offer customers innovative solutions, ultimately contributing to deposit growth.
The Importance of a Growth Mindset When It Comes to Measuring Success
To successfully achieve deposit growth, financial institutions need to adopt a growth mindset.
James stresses the importance of recognizing that "what got you here today is not going to get you where you want to go tomorrow."
Furthermore, financial brands must be prepared to monitor their deposit growth efforts and adjust their strategies as needed.
James emphasizes, "You've got to be able to measure the return on investment, whether it's time, talent, or technology."
Track key performance indicators (KPIs), identify what works, what doesn't, and make data-driven decisions to optimize deposit growth strategies.
By embracing change, adapting to new strategies, and continuously learning, financial institutions can foster an organizational culture that supports deposit growth.
In an ever-changing financial environment, banks, credit unions, and fintechs must adopt innovative strategies to achieve deposit growth. So start today with these three action items:
- Implement data-driven strategies: Identify specific organizational needs and leverage the minimum required data elements to make informed decisions and create targeted marketing campaigns.
- Enhance onboarding and customer engagement: Focus on engaging new customers with the most relevant products and services, ensuring they have an active debit card, are using online and mobile banking, and are making transactions through their accounts.
- Encourage a culture of continuous improvement: Foster a growth mindset within the organization by celebrating small wins, learning from data insights, and promoting a proactive approach to addressing customers' needs and building lasting relationships.
By incorporating the expert insights and recommendations from industry leaders James Robert and James, your organization can proactively address customer needs, prioritize customer experience, and foster a growth mindset.
With a strategic approach, financial institutions can confidently navigate the challenges of today's financial landscape and pave the way for a successful and prosperous future.
This article was originally published on May 6, 2023. All content © 2023 by Digital Growth Institute and may not be reproduced by any means without permission.