Rates are up. Rates are down. Rates stay steady. A certainty of the financial markets is one of these three scenarios is happening at any point in time. Additionally, the variables of competing expectations on the timing of rate adjustments make it even trickier to gain market share.
Much analysis and consumer/financial press is focused on “What is a consumer to do in these various scenarios?” Plenty of advice, from investment advisors, wealth managers and even so-called “experts” online exists for consumers to consider.
Even as rates adjust, and it may appear that some are waiting for additional changes, there are always substantial deposits available to be locked-up in time deposits. Whether they are rolling off of previous time periods, additional savings, money pulled out of the stock market, inheritances, sales, etc., consumers often have to pay attention to the earnings on their free cash, even when rates are low.
So what is a bank to do? How do they attract deposits during these various rate environments? More importantly, how to attract new deposits?
Our experience as a marketing agency with expertise in financial services has allowed us to highlight six key steps in how a bank can grow deposits in any rate environment. These include a combination of questions you should pose to any agency in consideration. Along with recommendations that are within your control internally.
We have worked with client banks in a variety of scenarios, and in each case, when the key steps are aligned, we have mutually achieved results that are consistent above agreed upon KPI’s.
Internal Bank Strategies
High Ratings
Consumers are willing to consider alternatives to their current bank, in order to gain a financial advantage from higher rates. However, they are also nervous about banks outside their general geographic area. Unless you are a well-known national bank, there are always concerns about reputation. Thus, one way to alleviate concerns are your ratings.
Are you considered a strong, financially secure bank? How do the various online rating services rate your bank? You may disagree strongly with how they rate you, but the fact is consumers will not be as well versed in the nuances of your financials, your history and the credit worthiness of your balance sheet. However, they will make quick and arbitrary decisions based on the ratings. This must be conveyed clearly and distinctly, along with any awards from banking associations.
Account Opening Process and Customer Service Reputation
If the plan is to gather deposits online and outside of your geographic area, digital consumers want (and now expect) a smooth, attractive and intuitive account opening process. They are also just as concerned about your customer service reputation.
Online reviews do matter, so pay attention to how you are perceived online. It’s vital to take the steps to make the necessary improvements before embarking on campaigns to gather deposits. We recommend beta testing your online account opening process, review closely the data that shows drop-off rates at each step in the process, and think through the implications from a consumer perspective to make adjustments.
Your compliance and legal partners are important in the process and will work to make sure the bank is protected, but trade-offs happen. For example, in their account opening process, a client bank asked if a prospect was involved in the cannabis industry, as required by their compliance folks. While it’s an important question, it led to an abnormally high abandon rate early in the process. Consumers felt that it conveyed more intrusive questions would be following. Once it was moved to the end of the process, the stick rate increased substantially.
Commitment to Being Competitive in Rates
There are two important considerations here. If you are mainly gathering deposits through branches, then your local competitiveness is most important. However, if you are targeting digital growth, then your competitive set widens considerably.
We often advise clients they do not in fact have to be #1 in rates. Usually there is an outlier in the market advertising an unseemly high rate and consumers become rightfully skeptical. However, we do advise to be in the top 3 in your competitive set at any one time, for at least two time products at once (maybe 30 day and one year, of 90 and 18 months, etc.).
Agency Marketing Strategies
Understanding Your Needs
Financial services are a heavily regulated business. The regulatory, legal and compliance issues are complex. A mistake in your advertising can be costly if consumers are misled, or if regulators believe you were trying to do so.
When you are considering an agency to create and place advertising, knowledge of the fast changes in your industry is critical. A time deposit is not a beer, or a piece of clothing. Knowing your lingo is important, but being able to truly grasp your culture is even more important.
If the campaigns proposed do not align with your mission and value, your employees and current customers will sense the gap immediately. If the process proposed doesn’t recognize the importance of buy-in from your legal and compliance teams, along with senior management and allow for the time and room for that to happen, then you should question the likelihood of success.
Targeting Most-Likely Markets
Today, data is king. With so much information available about your customers, you can now see their demographics, selection of products and services, and retention rates. What is key from your chosen agency is the ability to sift through the mountain of data. This allows you and your agency to not only understand what has worked, but more importantly, predicting where else your message will resonate with potential customers.
You do not want to waste precious marketing dollars (and time) with generic, widely placed messaging. The ability to laser target prospects, with messaging that is continuously tested for effectiveness is here and is proven to move the needle.
Adapting Strategy from Data
Online advertising is as dynamic as you want to make it. You can choose to “set it and forget it” and some agencies will do so.
But why would you? The ability to consistently be A/B testing, allows you to reach different parts of your prospect funnel with appropriate messaging for where they are in their journey of discovery. The ability to know immediately what messaging is working best, which targeted market are over-indexing in their response (or under-indexing) and so on are all tools at your agency’s fingertips.
How do they use that data to best position your messaging? How often do they reference industry benchmarks, experience from prior campaigns, best practices, and awareness of your competitors’ campaigns? In an every-changing marketplace your agency needs to be providing expertise and advice, beyond just ability to place advertising.
Marketing Deposits with Zozimus
Growing time deposits are possible in any rate environment. There are always consumers that are considering their options, therefore their time deposits are more flexible in where they bank than their core deposits are, and they are often better for a bank’s balance sheet than brokered deposits.
Additionally, while rate competitiveness is critical to growing your time deposits, it is not the only consideration in how to successfully run a deposit growth strategy. The steps you take as a bank, and your agency’s knowledge, expertise and experience are all critical parts of your success.
As a full-service agency with successful expertise for our banking clients across a variety of rate environments, we’d be glad to further the conversation.
Michael O'Neill
Executive Vice President
From a large corporate financial services career, to loving life at an entrepreneurial agency, Michael can relate to the rapidly evolving landscape many of our clients work through. Often describing his Zozimus role as a “UN translator”, Michael is just as likely to be explaining our creative process to a client as he is explaining the nuances of banking, insurance or education to our specialists. He is a former commercial banker and senior executive who served in a variety of leadership roles in both banking and insurance industries.
BOSTON, MARS
