Is your financial institution struggling to increase deposits? You’re not alone. Deposits at most financial institutions have plummeted recently, falling nearly $126 billion in the last two years.
Deposit Barriers
Why aren't more people making deposits now? One reason is that more people have shifted their money to investments with higher yields since the Fed began raising interest rates in 2022.
And after the infamous bank failures in the last few years, people are nervous about keeping their money in traditional financial institutions. There are now more places than ever for people to put their money. For example, online payment systems like Venmo and Amazon Pay have proliferated.
Given these realities, how can you increase your deposits? You need to give potential customers good reasons to choose your bank for deposits.
Here are five actionable ways you can make sure your financial institution is the best choice for deposits:
- Research your customers.
- Focus on reaching new customer segments.
- Offer incentives.
- Be a hometown hero.
- Enlist first-rate software.
Continue reading for details on these ideas.
1. Research your customers.
To begin with, research is key because it will show you what's most important to your customers. Your team should assemble profiles of existing customers who make substantial or frequent deposits. What demographic patterns do you see?
For example, banks whose deposits come mostly from younger people need to offer a convenient and robust digital banking experience. But banks in a rural area probably need to invest more in maintaining an in-house experience for those older people who still prefer to do their banking face to face.
Equipped with information about your depositors, you can then target your main deposit groups through social media ads, search engine ads, email campaigns, and other effective forms of marketing.
2. Focus on reaching new customer segments.
After you’ve made sure your deposit offerings meet the needs of your typical customers, you’ll also want to find ways to reach other customer segments, such as small business owners or high-net-worth individuals. By tailoring your products and services to meet the unique needs of these groups, you can attract customers who are looking for specialized banking solutions.
For example, you can appeal to small businesses by offering remote deposit and ancillary services like partnering with a third party for credit cards.
You can also offer banking services in geographic areas where there is little competition or where the population is growing to attract new customers who may not have considered your bank previously.
3. Offer incentives.
It’s probably no surprise that raising deposit rates is the most popular way within the industry to get more deposits. This is especially true now, while the Fed is raising rates.
Of course, not every FI can raise its deposit rate enough to compete with the higher-yield investments that are wooing depositors away now. However, if you can raise your rates at all, do so. You can then advertise that higher rate heavily.
Besides raising rates, consider the following ideas to entice new customers and reward existing customers:
- Pay cash bonuses to open an account or multiple accounts.
- Use bump rates for multiple accounts.
- Offer no-charge services, like free checking or free printed checks.
- Provide free notary services.
- Offer referral bonuses to existing customers.
- Create savings challenges to reward customers for meeting savings goals, such as rounding up to the nearest dollar and automatically saving that amount.
- Give physical gifts or swag, like coffee cups with your bank’s logo printed on them.
4. Be a hometown hero.
Do you support local businesses and causes? If you don't, you might want to start doing so. And, if you do, make sure prospective local customers know about it.
Here are some suggestions for how to support your community:
- Build a personal relationship. Especially if you're in a rural area, figure out ways to improve your customer experience. It’s all about the personal touch.
- Participate in the community:
- One bank gives high school students the opportunity to actually build a home or become a teller for a semester.
- Work with charities. Host a fundraising event and donate all proceeds to the charity. For example, you could arrange a summer concert or BBQ on your lawn and donate profits to charity.
- Partner with local businesses to offer attractive banking services to their employees. For example, your bank could work with local businesses to offer their employees checking and savings accounts, credit cards, loans, direct deposit, merchant capture services, and products directed to the specific business. This could include discounts or special promotions for employees who sign up for these services.
- Provide free financial education:
- Programs for kids and young adults, such as workshops or seminars that teach them about budgeting, saving, and investing.
- Personalized financial advice for adults, either through in-person meetings or online tools.
- Offer scholarship programs, such as drawing or writing competitions or scholarships based on GPA.
- Invite local politicians and area businesspeople in for special networking events, which could earn positive media coverage.
Many civic-minded people would be more willing to deposit their money in an institution that helps to build up the community. And if you support local business, regional business leaders might recommend deposits in your FI to their employees.
When you’ve invested time and money in supporting local interests, make sure your ROI reflects that by using smart digital and traditional marketing methods:
- Use local SEO. Make sure your marketing department knows how to optimize Web searches for your local branch or branches.
- Use social media to share how your bank is supporting the community.
- Solicit reviews from satisfied customers and post those on your website.
- Advertise on radio, on billboards, in newspapers, and in magazines.
5. Enlist First-Rate Software
It's vital to provide your FI with cutting-edge and truly dependable software. That way, you can be sure that making online deposits will always be easy for your customers.
Using the best software provides many advantages—too many to list here. Two advantages that can make a difference in attracting depositors are enhanced security and digital banking.
Enhanced security protection is increasingly important for depositors. The recent bank failures have weakened the trust in banks, so you need to make sure your depositors know their money is safe with you. Your software solution should provide state-of-the-art security that will help you compete for deposits and meet regulatory requirements.
- By implementing advanced security measures, such as two-factor authentication or biometric identification, your bank can demonstrate their commitment to protecting their customers' assets and personal information.
- Because bank employees aren’t involved, there’s less possibility of human error.
Ever since the COVID lockdowns, people have increasingly expected digital banking options, from depositing checks with a snapshot to contactless card payments. Digital banking saves time for customers and is more efficient for your bank, too. When upgrading your digital banking offerings, be sure to include the following considerations:
- Educate prospective online customers about security to allay their fears of online vulnerabilities.
- Make sure your online application is easy. If you're doing events and advertising to draw people in, don’t discourage prospective customers with a difficult or lengthy online application process. It pays to ensure that the system you're using is a seamless and easy way to open accounts and use them.
Conclusion
In the end, when you have excellent service, smart strategies, and first-class software, major increases in your deposits may not be far behind.