IN THE 12 MONTHS ENDING JUNE 30, 2018, CHECKING ACCOUNT BALANCES GREW A PALTRY 0.1%, ACCORDING TO PEER DATA BEING TRACKED BY GALAPAGOS.
Yes, there is increased competition from national banks and digital-only competitors and yes, the market focus has shifted toward CDs and Money Market accounts. However, traditional checking acquisition programs have grown tired and no longer deliver the same results as in the past.
Find out how your performance stacks up and what you can do to increase new checking account deposit growth.
Several factors appear to have contributed to this lackluster performance:
- The national banks and digital-only competitors continue to provide a superior online or mobile account-opening experience and greater convenience, both features prized by customers.
- Account-level churn continues to decline, due, in large part, to the increased “stickiness” of online and mobile banking.
- Sales efforts at community FIs are not fully developed.
- In the chase for deposits, many FIs have switched their focus toward CDs and Money Market accounts
But the fact remains that traditional acquisition programs, whether they offer rewards-based rates, packaged benefits or free accounts, have become tired.
Those of you who have worked with the team here at Galapagos know that we have never been fans of off-the-shelf, packaged checking account acquisition programs. (See: A different approach …)
Downside of Free-and-a-Gift Checking Programs
- Generate accounts, not households
- High year-one attrition rates, averaging 30%
- ROI is overstated
- Promotional offers are tired and devalue the brand
There is a better way to grow deposits and it can triple your new account acquisition rate.
Frustrated by off-the-shelf solutions that run counter to the brand position of most community FIs, Galapagos developed a program several years ago that attracted new accounts based on the value of the banking relationship, not the short-lived, easily-copied appeal of a giveaway or some obscure feature.
The Galapagos approach:
- Targets household relationships, not just checking accounts.
- Emphasizes the benefits of working with a community FI.
- Connects with prospective customers in a more engaging way through events and social media.
- Supports and reinforces the basic tenets of community banking.
Even in the current ultra-competitive market for deposits, the program continues to drive impressive results:
Keys to Success
The program relies on careful targeting of prospects who fit the profile of customers the FI wants to attract. For example: 83% of “traditional,” multi-channel checking account users live within a four-minute drive-time of a branch and require convenient branch access as one of their selection criteria.
Communications are crafted carefully to reinforce the FI’s brand and highlight several key messages of inclusion, consistent with the community banking philosophy.
Prospects are encouraged to engage with “brand ambassadors” of the FI at events and through social media. The whole approach invites a two-way conversation during which prospects are more willing to reveal the depth of, and motivating factors behind, their financial needs.
If you would like to learn how the program could benefit your institution, simply provide us with a list of your branches and your acquisition target segments, and we’ll project a year-one acquisition rate for you. If deposit acquisition, in general, is a priority for you, we’ll be glad to chat. We’ve been working with institutions all over the country on this challenge; we’ve seen what’s working and can design a successful strategy for you.