It’s Back to the Basics when it comes to Growing Deposits

How do banks grow their deposits with higher-quality customers who are less likely to leave or be repriced upward? Sometimes the simplest solutions is the best.

In 2022 bank deposit rates fell for the first time in over 75 years. After bolstering savings during the pandemic, people are starting to spend down their cash (at the end of 2022, the personal  was 3.4 percent, down from 7.5 percent a year earlier, according to the Federal Reserve Bank of St. Louis). 

And as interest rates have risen over the last 18 months, the competition for high-yield deposit accounts has increased leaving banks fighting for high quality customers. 

"We believe the quality and type of deposits will begin to separate bank stock performance." RBC Capital Markets Analyst, Gerard Cassidy

So how do banks grow their deposits with higher-quality customers who are less likely to leave or be repriced upward? You could raise your savings rates or launch a high-cost acquisition campaign -  but remember the 2014 McKinsey study that showed acquiring a new customer can be up to five times more expensive than retaining an existing one?

By cross-selling to existing customers, banks can save on acquisition costs and target customers who are more likely to have the high quality deposit accounts they need.

But what if you don’t already have a good pool of HNW customers to cross-sell? 

While it seems counterintuitive, acquiring new loans with the right borrowers can improve the performance of your loan portfolio AND give you a good pool of customers to target for deposits. 

If you’re like most banks, you’ve spent millions targeting prospects in your market and probably feel like if someone in your footprint needed a loan, you’ve already presented an offer. But Wealth Tech advancements like UPTIQ’s Financial Intelligence Platform gives lenders access to an entirely new pool of high-quality, high net-worth customers through a connection to financial advisors who want to help their clients use leverage to preserve and grow their wealth. 

Lenders provide UPTIQ with their loan criteria including but not limited to: 

  • Min and max loan amounts
  • Type of loans offered
  • Credit score ranges
  • Collateralization requirements
  • Debt to income ratio
  • Income

So lenders are only presented with applications from customers they want to add to their portfolio and save time and money on adjudication with approval rates at nearly 100%. 

Wealth Tech Platforms like ours will help you get the right loan customers on your books, then you need to turn on the marketing engine to turn them into deposit customers.

Think about what you learn about a borrower through the loan application process. You know their payment history, net worth, assets and account balances held at other institutions. So if you’re selective on the loans you book, you can be just as judicious in your selection of customers to cross-sell. And the analytics and insights you’ve gained through the application and servicing of the loan will give you a competitive advantage as you employ personalized marketing strategies.

Some of these strategies can include:

  1. Analyze your customer data and create personalized offers for deposit accounts based on the the type of loan they have with you along with their application information
  2. Bundle loans and deposit accounts by offering discounted loan rates with loan payments auto paid from the deposit account
  3. Follow up with customers as soon as their loan is funded to determine what additional financial services they need

Cross-selling is by no means a new strategy. But as 14th-century logician and theologian William of Ockham deduced, “the simplest solution is almost always the best.”

It’s Back to the Basics when it comes to Growing Deposits
Katie Robinson

Katie Robinson has a background of proven success in marketing, product development, innovation and investment in the retail, financial services and automotive industries.

Prior to joining UPTIQ, Katie was Senior Vice President of Strategic Innovation at FIS, the world’s top provider of technology, processing and services to the banking and payments industry.

Katie’s track record of success also includes previous positions at Alliance Data’s Retail division; where she developed and managed integrated credit, marketing and loyalty solutions for some of the most recognizable brands in North America.

She was also Vice President of Marketing for Clarivoy, an automotive attribution company, with responsibility for Branding, PR, Digital Marketing and Inbound Sales.

Katie holds a degree in Women’s Studies from The Ohio State University.