5 steps for FIs to stimulate deposit growth

Deposit levels are declining for the first time in decades, and FIs are tasked with a challenge: grow deposits without straining the marketing budget. JB Orecchia, President and CEO of SavvyMoney, has five steps for FIs to stimulate deposit growth by nurturing customer relationships through excellent customer experiences.

By JB Orecchia, President and CEO of SavvyMoney

How FIs can grow their deposit levels using this 5-step plan

Picture this: It’s Q4 2021. The rearview mirror reflects the worst of the pandemic. The economy is thriving — budgets are open, consumers are spending and capital is flowing. Total deposits have risen 35% since the end of 2019 in an increase the Federal Reserve described as “above historical norms.”

But fast-forward to 2024. The current financial climate has cooled and deposit levels have declined for the first time since 1948. Financial institutions (FIs) now face the challenge of growing deposits without excessively straining their marketing budgets. To combat this dilemma, I’ve come up with a five-step plan to help FIs navigate the current choppy financial waters.

1. Concentrate on top customers and members

Because converting new customers from leads requires significantly more resources, nurturing existing customer relationships is the easiest and most productive way for banks to stimulate deposit growth. New customer acquisition can cost five to seven times more than customer retention, so cost-conscious FIs will focus on their best current customers to bolster loyalty, drive deposits and save on marketing spend.

In addition to saving money, concentrating on existing customers and members can generate substantial profit. According to PWC research, banks can achieve a return of 70% or more by implementing initiatives targeting established customers and members who already trust the institution.

To maximize existing customer relationships, FIs can leverage data to identify and prioritize the most valuable customer segments. For example, based on credit profiles and borrowing behavior, FIs can identify “transactors” versus “revolvers” who charge on their credit cards to earn rewards, but pay them off every month. Revolvers are good candidates to market high-interest CDs or money market accounts. Data analysis highlights the most profitable, loyal segments so the FI can use these insights to deliver compelling, well-timed offers to customers and members who have the capacity to deposit more.

2. Create irresistible offers

A tried and true method to attract and retain customers? Make them an offer they won’t want to refuse. A compelling value proposition invites customers new and old alike to engage. Offer competitive interest rates, terms that are better than those of competitors or exclusive product/service bundles like credit score solutions integrated into their banking platform. Sweeten deals with additional benefits like:

• Fee waivers.
• Rewards programs.
• Access to financial education resources.

Though some of these perks, like fee waivers, result in a short-term loss for the organization, FIs should consider what they’re willing to give to fortify customer relationships for gains over the long term.

When extending offers, remember personalization’s value. According to McKinsey research, 71% of consumers expect personalized interactions and 76% become frustrated when a company fails to meet that expectation. FIs offering customized, relevant outreach will have a competitive advantage over those that don’t.

To deliver the most enticing offers to the right customers, FIs must analyze customer data. This analysis identifies customer patterns to help predict future outcomes — FIs can leverage that information to create and deliver the right offers to their customers. For example, FIs can use data to identify customers who viewed a deposit offer but didn’t apply. Retargeting these users by sending an email or targeted ad when they log back in can yield higher conversion rates.

3. Maximize affordable marketing strategies

Because of the numerous cost-effective channels available, marketing teams can do a lot with a limited budget. From social media to email marketing to targeted ads, digital marketing methods are relatively inexpensive ways to connect with customers and members. The average person spends over two hours per day on social media and clocks almost seven hours of total daily internet-connected screen time. Online, omnichannel options meet people where they already are.

After launching their digital marketing campaigns, FIs should assess their effectiveness to determine which channels provide the most value. To maximize customer engagement, marketing teams should allocate their marketing budget to those channels yielding the highest ROI. A caveat: Engaging a customer may take several touches through multiple channels.

4. Make banking hassle-free

Customers crave effortless experiences, so FIs should focus on creating easy, omnichannel digital banking interactions. To deliver an ideal customer experience, consider the following tips.

• Enable customers to switch seamlessly between devices without having to redo applications or re-enter information.
• Optimize all banking platforms for mobile usage, as many customers are now managing their finances exclusively through mobile devices.
• Reduce the number of form fields and clicks in each online process, from loan applications to credit health management, to greatly improve the user experience and increase the conversion rate.

Improved customer experiences lead to increased customer satisfaction, and satisfied customers are six times more likely than unhappy customers to stay with their current bank, according to McKinsey research.

5. Leverage digital to develop lasting customer relationships

The acceleration of digital transformation has touched nearly every industry, and banking is no exception. Nearly 80% of consumers now prefer to bank digitally. Because of its constant availability and access from anywhere, digital usage correlates with higher customer satisfaction. In fact, customers who access their bank through digital channels (mobile app or website) have the highest average level of satisfaction.

Beyond customer satisfaction, retail banks prioritizing digital optimization for customer experiences grow 3.2x faster compared to competitors that don’t. Since nearly 90% of customers value their experience with a company as much as its products, improving digital engagement is a crucial stepping stone on the path to strong, lasting customer and member relationships.

The current uncertain economic climate has slashed budgets. Marketing teams should operationalize effective customer retention strategies by prioritizing customer experiences to deepen customer connections and drive business, deposits and organizational success.

About the Author

JB Orecchia is the President and CEO of SavvyMoney. Since 2011, JB and his team have built SavvyMoney into an industry-leading credit and lending tool that today integrates with 40 digital banking platforms and supports nearly 1,260 financial institutions with the goal of providing financial education and personalized lending. JB has more than 35 years of experience in consumer finance, fintech and interactive media. He started his finance career in 1988, with 10 years in various senior roles in lending and marketing at Household International. In 1998, he saw an opportunity to make credit reports accessible over the internet and joined the original senior team at FreeCreditReport.com/Experian Consumer Direct. As EVP of Partnership Marketing, he led the team responsible for business development and online marketing of the direct-to-consumer credit report and score product for 10 years. To expand on his digital marketing experience post-Experian and pre-SavvyMoney, JB had the opportunity to be Vice President of Marketing for Disney Online, where he directed online marketing, CRM, research and analytics initiatives.