New customers in 4 easy steps.
The pressure on banks and credit unions to grow net deposit accounts is increasing thanks to big bank encroachment on consumer and small business accounts. Spurred by the recent uptick in fintech activity, as well as global shifts in consumer relationships with the banking industry. Despite this change, community banks and credit unions still championing customer service as their greatest competitive advantage can improve current customer relationships, while developing new ones, by expanding their historical product scope.
1. Evolve from traditional success factors.
Fintech products are changing the average consumer’s banking habits. A recent study has shown that most millenials prefer a minimal relationship for the most basic of banking services; opening a checking account or maximizing a standard interest savings account. This could mean community banks with superior customer service, could already be losing this demographic. Thanks to fully-online banks like Ally, and mobile transaction technologies like paypal, apple pay, and apple wallet, (coupled with the advancement of mobile transaction security and authentication), millennials may soon never need to step into a bank and meet your best customer service rep. This is the new reality for banks looking to compete for deposit accounts as this generation begins obtaining and growing wealth over the next decade.
Now, this doesn’t mean abandon friendly service for a purely synthetic consumer engagement model. Everyone still generally prefers empathetic interactions. However, augmenting your representatives with the tools to empower their customers with next generation banking tech will ultimate develop a loyal account.
2. Build a robust financial ecosystem.
New growth opportunities become more important as the economy slows into recession next year as some experts predict. Even if the economy remains strong, winning the customer service ground-game can position many institutions for even greater success. A financial ecosystem can provide both basic services and up/cross sell opportunities as the deposit account relationship matures.
However, building an ecosystem from scratch will take time and plenty of investment. Attracting deposits isn’t as simple as opening a branch in a densely populated community. According to ABA Bank Marketing, this is increasingly difficult to do, however there is a step by step process to developing this strategy and executing relatively quickly.
3. Develop new products.
Creating and offering new banking products can also generate deposit accounts. Small businesses, the long-time underserved segment in banking, are essential to U.S economic growth projections and microloans are one great example of a product mix community/regional banks are exploring for new deposit growth opportunities. That may be one reason that competition for this business is heating up.
4. Combine the old with the new; for real GROWTH.
The recent Small Business Lending Survey conducted by the Federal Deposit Insurance Corporation (FDIC) found that both small and large banks most frequently cite relationships and personal attention as their top competitive advantages. With customer reviews playing a key role, consumers now expect just a bit more service-on-demand, or they may look for easier, tech-based solutions that the new “mobile-entrepreneur” requires in order to remain competitive in her respective market.
Potential borrowers want a financial partner they can rely on through a strong and developed relationship.
We’ve been talking to a number of institutions about how web-based loan origination is making it easier for traditional banks to attract and win small business loan customers while growing their net deposit accounts. If you’d like to learn more about how your team can get involved, check out more about our LaaS platform.