Boosting Growth in a Far-From-Normal Banking Environment

As discussed in a recent blog post, banks and credit unions of all sizes continue to navigate a bizarre disconnect. Awash in a steady stream of deposit inflows from both businesses and consumers, institutions are hard-pressed to generate sufficient loan demand to put these funds to profitable use.

A crucial part of the challenge stems from account acquisition capabilities not keeping pace with customers’ digital evolution. This trend was already well underway but accelerated during the pandemic. SRM’s recent white paper, How Financial Institutions Can Boost Account Growth to Move with Changing Margins, outlines an actionable methodology for leveraging data analysis and market expertise to identify and act on a consistent stream of opportunities.

Here’s a preview of some of the insights covered in the white paper.

Onboarding…It’s Not Just About Digital Banking

It’s no secret that increasing numbers of customers are opening accounts online. Too often, however, new account onboarding has become synonymous with the process of establishing digital access. Although ensuring new account holders connect to online and mobile channels is a fundamental part of the process, it’s far from the end of the task.

Research confirms that clients are particularly receptive to additional offers within the first 12 months of a new banking relationship. The onboarding process is perhaps a financial institution’s best opportunity to educate new customers about additional offerings (loan or wealth products, for example) while simultaneously augmenting data already in hand to develop a deeper view of their financial situations and underlying needs.

Each customer presents a unique profile, so a one-size-fits-all approach is inherently sub-optimal. Artificial intelligence can be a powerful enabler for personalizing this routine and limiting the time and effort required of the new client (and staff). Think of it as the equivalent of the informal fact-gathering that previously took place in a branch banker’s office while forms were being completed and signed.

Proactive cross-selling is the best retention tool and an excellent source of sales – but only if the customer is happy with the state of their existing relationship. For this reason, activating new account holders during the onboarding process takes on even greater importance.

Swing for the Fences? Or Deliver a Steady Stream of Hits?

Bank and credit union marketing strategies often revolve around a few extensive campaigns each year. The appeal of this “swing for the fences” approach is understandable – it’s more likely to bring acclaim to the program managers reporting big numbers and is easier to track results using legacy systems. Unfortunately, our analysis shows it tends to deliver thinner margins and diminishing returns.

The uncomfortable reality is that marketing calendars do not dictate the timing of existing or prospective clients’ needs for financial products. Consider the growth equation more thoroughly described in How Financial Institutions Can Boost Account Growth to Move with Changing Margins:

Growth = Capacity + Propensity + Awareness

The product and brand awareness created by big splash marketing campaigns is valuable, but far more so if combined with a steady stream of messaging served up when a prospect has the propensity to buy. Better yet, data analytics can inform more targeted – and more profitable – outreach to prospects sending implicit or explicit signals that they are ready to buy.

In baseball parlance, a steady flow of incremental advances – singles and doubles enabled by “always-on” marketing – generates more wins than the occasional home run. And thanks to data analytics, such results can now be measured.    

The Bottom Line

Although the pandemic may have fueled the current flood of deposits, the underlying structural shifts toward digital channels were already well underway and will outlive COVID-19’s other effects. How Financial Institutions Can Boost Account Growth to Move with Changing Margins provides actionable insights on how banks and credit unions can achieve systematic growth in this new environment.