For banks and credit unions that care about competing on experience rather than price alone, you don’t just want to attract deposits, you want to gain engaged customers. Traditionally, offering exceptional customer service in person at branches was the best strategy to do that. But while the in-person experience is still important to many consumers, you also need to create a strong digital experience for the people who prefer online banking – which is a sizable market. In a 2022 PYMNTS survey just under half of all respondents said they were very interested in digital-only banking services.
Using fintech to create a better banking experience for your customers gives you a way to stay competitive that has far fewer drawbacks than high-expense, historic methods. In fact, it offers a number of valuable benefits.
- Win low-cost deposits. Balancing how much you gain in deposits with what you spend to capture them is an important part of the equation. Winning deposits by providing useful tools and resources has a lower cost of funds (COF) than doing so with traditional offerings that come at a greater expense.
- Attract more valuable customers. Earning the business of rate shoppers only provides a temporary, partial win. You’ll gain some of their deposits for a set period of time, but that’s probably all you’ll get. But the customers you win by focusing on creating a great overall experience? They’re much more likely to keep their business with you across financial products and for a longer time.
- Gain young customers. Millennials and Gen Z care about saving. Plinqit’s State of Savings report found that young adults are significantly more likely than their older counterparts to be saving money. And they have no qualms about using fintech and banking apps. Already as of 2021, 95% of Gen Z and 91% of millennials were using mobile banking.
- Build longer-term relationships.Competing on price can produce a temporary boost, but focusing on relationship marketing is what leads to deposit stability. For community banks and credit unions, the amount of new business you gain often matters less than how much of it you retain. Capturing the business of one customer who banks with you for a decade is a much better deal than attracting ten new rate chasers.
- Recognize the benefits of savings for your customers…and your financial institution. Even in the midst of inflation, consumers understand the importance of setting money aside. In Plinqit’s survey, 91% of all recipients said they were saving. Customers care about improving their financial habits and working toward their savings goals. Helping them accomplish that isn’t just good for them, though. It has tangible benefits for you as well. The institution gets stickier, long-term deposits that increase your reserves and enable you to make more loans. Plus, resources that contribute to financial wellness education tend to have a positive impact on average account balance. That keeps more money in your hands. And consumers who have more money saved are in a better position to consider other financial products you may want to cross-sell.
- Take a load off your operations team. For smaller FIs, the idea of getting a new tech product set up and working with the systems you already have may feel like more trouble than it’s worth. With the right fintech partner, though, implementation is easy. Sit back and let a tech-savvy staff specifically experienced in getting their product to work with banking systems do the hard part. All you have to do is let customers know about the awesome new financial product available to them.
- Get an “in” to new markets by testing an affinity brand. For many consumers, considering a brand’s values now plays a key role in deciding where to put their business. For banks, one way to attract these consumers is by establishing an affinity banking brand. An affinity brand with a singular deposit product, such as high-yield savings, can test your brand in a low-risk way. With a low up-front investment and no branch network, it is possible to have a solid COF ratio as you explore a new brand. Partnering with a fintech company that can do this without the overhead of a full online banking and core system setup can serve as a barometer for future brand expansion. An affinity-branded product can also ensure you do not cannibalize current deposits with a higher rate offer.
- Win (and keep) customers. Offering a financial wellness fintech product may not seem like an obvious slam dunk for bringing in new customers. But the research is clear: financial wellness support is something customers actively want from their banks. Research from Mintel found that 68% of consumers want support and financial advice from their banks, and only 45% believe they’re getting it. According to J.D. Power research, customer satisfaction increases when they believe their bank supports them during challenging economic times. 63% of consumers who receive support from their financial institution say they definitely won’t switch banks. In other words, supporting financial wellness is how you make those deposits sticky.
Focusing on how best to support your customers as they navigate a confusing financial landscape is smart business. Focusing on your business while your trusted fintech partner and savings product do the heavy lifting for you is a smart strategy. If you appreciate these 8 benefits of using fintech to earn sticky, long-term deposits, you’ll want to download the full white paper.
