Financial institutions across the U.S. have seen deposits stagnating or diminishing. The problem this poses to financial institutions is obvious. The solution to that problem? Not so obvious.
Sometimes your best opportunities to improve are staring you straight in the face. What percentage of your new accountholders actually become engaged with your bank or credit union? What are you doing differently from others as part of the account opening process?
During my time at a credit union, before I moved back into fintech, we measured accountholder engagement by whether or not we had received their direct deposit relationship, payment activity on the account, and the number of products the accountholder had adopted. We found that we were far more likely to become the primary financial institution of our account holders if they moved their direct deposit over as part of their account opening experience — not the next day, not a week after opening their account. They needed to switch it over right at the time of account opening.
When people are opening an account they are giving you a lot of their attention, for a short but concentrated period. You may never have their attention again like you do in this moment.
Here are three must haves for the account-opening experience:
1. Switch their accounts over to you. To do this successfully you’ll need to get their direct deposit moved over, as well as their default payments coming out of their other bank account. Vendors have come up with services that make this easy — find a great account switching platform and put it into your marketing plan.
2. Get an understanding of the accountholder’s goals. Apps like Wealthfront have built incredible onboarding experiences where they ask about risk tolerance for investments, when people want to retire, etc. Onboarding is the time for that conversation.
3. Build your brand. People may come to you because of a rate, but they stay because of their experience. Consider inviting new account holders to join your organization in giving back to the community, somehow, as part of their sign-up process. Think of the Tom’s mission. For every Tom’s shoe purchased, for example, the company donates a pair of shoes to a child in need.
Show people what you stand for during your onboarding experience. Consider showing them that by storing their money with you, they’re ensuring that the local bakery can get a loan. Give coupons to that bakery away as part of your onboarding experience. Think differently!
As you consider how you can improve engagement through onboarding, consider the following questions:
- What could you add to the onboarding experience that would help develop the relationship even better?
- What if you could double the number of people switching their direct deposit over to your financial institution?
- Who in your market is growing their deposits? What are they doing differently?
- What if 40% of your new accounts were switching their bill payments over to their new account as part of the sign up process? How could you make that happen?
- Could you give special rates to account holders willing to move over large deposits?
Why do people open new accounts? They’re often in the midst of a life event where they could be swayed one way or another. These people might be getting married, moving to a new location, or buying a house or car. They’re willing to consider change — so give them a reason to!
Get Serious about Digital Advertising
Newer, non-bank companies like Chime, Acorns, and Square market their products digitally. These are companies that have grown to millions of customers in just a few years, and they didn’t do it by sponsoring a local Little League team.
I’m not saying that sponsoring local events isn’t a decent way to market — especially for a local financial institution — but if you want to get serious about growing, you must embrace the new mediums for advertising. Facebook, Instagram, Google, Twitter, and so many others have insane abilities to target people for advertising.
I spoke a while back with a financial institution that seemed to be cutting edge. They had a great brand, were working with several great tech providers, and said they were doing some digital advertising.
I inquired what sort of digital advertising they were doing. It came out that they were paying a marketing agency to post pictures to their Facebook page. I asked how much engagement they were getting from that. They responded that they couldn’t quite tell, but felt it might be a waste of money. Turns out they were spending $6,200 per month for someone to post a few pictures on their Facebook page a couple of times a week. They would get a few likes — most of them from employees — but they weren’t generating any leads.
I offered to teach them how to do Facebook advertising if they would fire their Facebook “advertising” vendor — what they were doing was highway robbery — and route that spending to ads. They put the vendor on notice, and I taught them how to on Facebook. They now drive hundreds of leads a month to their website and are converting customers from Facebook.
Now, you may be thinking “Jordan, all we have to do is crank up our rates and deposits will follow.” Frankly, you can change your rates all you want, but if people don’t hear about them —the job of advertising — then you will struggle to bring in deposits. You can’t just publish your new rates in the newspaper and expect to have a bunch of new depositors show up. Digital advertising gives you a megaphone to get your message to today’s digital audience.
Think Like a Financial Scientist
As you go down this digital advertising approach, be willing to expand your abilities. I’ve come to find that I have to remake myself every few years in order to stay up to speed with that’s happening in the market and stay relevant in my role.
Watch YouTube videos about how to run a Facebook ad campaign or read up on how to do Google AdWords effectively. That’s how I learned seven years ago. It took me a few months and some budget to figure out what I was doing, but I brought my then-company’s cost per customer acquisition down from $112 to $28 in less than 6 months, and we increased the number of new customers by more than 300%.
When you start with ads, put your scientist goggles on. You need to start thinking in terms of experiments.
Allocate a few hundred dollars and six-eight hours towards your first Facebook experiment. Evaluate the results and try again with another few hundred dollars and another few hours. Try different types of content and messaging. Videos engage differently than pictures.
Do you want to emphasize “no fee banking,” or “bank local?” To me, this is a very enjoyable part of advertising. You get to see what resonates with your ideal customer and really home in on it. When you home in you begin to see your customer acquisition cost go down.
I strongly encourage you to develop this skillset in-house before going to an outside vendor. These are things every marketer should know how to do. As you learn and get better you’ll then appreciate what other vendors in the space are doing with regard to AI, account holder segmentation, and much more in the marketing and advertising space.
In the years to ahead, your financial institution has to become very good at bringing in new deposits and becoming the primary financial institution for your account holders. Learning those skills may require you to learn some new tricks and you might have to go outside your comfort zone. Do it!
Jordan Wright was previously Chief Technology Strategy Officer at Stanford Federal Credit Union. Prior to that, he was Director of Business Development at Q2ebanking.