How to Compete & Win in the Battle for Deposits
Deposits are ready to move again as consumers look for opportunities to get higher yields from their investments. While inflation remains high and interest rates continue to rise, more Americans are actively looking for ways to make their money stretch further and oftentimes, this involves moving their deposits to a different financial institution to get a better rate. In fact, JD Power data shows that 26 percent of consumers have moved their money to another institution in the last month and on average, they moved about one-third of their deposits.
Now that deposits matter again, so does deposit stickiness. In addition, today’s consumers are faced with economic uncertainties and more recently, the collapse of Silicon Valley Bank. As a result, they are now more conscious of where to keep their money. Many consumers are looking to move their assets to a bigger financial institution, with the assumption that their funds will be more secure, leaving smaller financial institutions with new challenges when it comes to growing deposits. That’s why now is the time for regional and community financial institutions to bolster their deposit growth strategy by incorporating a few key digital capabilities.
To start, community financial institutions should not underestimate the importance of a strong digital account opening experience. Today, a majority of Americans are happy to bank digitally. As of 2022, 78 percent of adults prefer to bank via a mobile app or a website. Therefore, it’s crucial that financial institutions make it easy for new customers to open an account on the device they prefer.
Why? Because Oliver Wyman research shows that less than one-third of prospective customers will visit a financial institution’s product page, and of those, only 13 percent will complete an application to open an account. Cornerstone Advisors research shows similar trends, with around one-third of larger financial institutions seeing account opening abandonment rates of 75 percent or higher.
At the same time, offering online account opening is just one element of an effective deposit growth strategy. According to Oliver Wyman, brand preference is actually set before consumers consciously decide they want to open a new account at a different financial institution. Most consumers, 87 percent, start the switching process with one or a few institutions in mind and typically spend less than a month researching options.
Effective Deposit Marketing is Crucial
Statistics like these demonstrate that effective marketing campaigns play a key role in driving digital sales and help ensure a financial institution’s investment in online account opening positively impacts deposit growth. To increase deposits, your bank or credit union must not only invest in a frictionless online account opening experience, your institution must also invest in its overall d...