Banks and credit unions face many challenges today, such as managing credit risk, addressing regulatory and compliance demands, developing and retaining talent, and growing non-interest revenue, just to name a few.
With interest rates increasing for the first time in years, the question remains; how do financial insitutions leverage the current climate to their advantage to gain, and retain more account holders from competitors? Financial institutions can still succeed while balancing the liability side of their balance sheet and appealing to new account holders, but in order to do this, banks and credit unions need a strategy for how to approach their customers and members without scaring them away.
How Does Your Institution Appeal To New Customers?
The main key to grabbing new accounts from the competition is to focus on the younger generations by utilizing technology they can relate to with social media, mobile access and technology based connections. The key to beating the competition in a fluctuating banking is to create a new core account holder base, while still maintaining strong relationships with traditional account holders.
One of the hardest challenges banks and credit unions face today is in finding new account holders who are motivated to open new low interest checking/savings accounts. It could be a valuable study to understand what kind of marketing would appeal to the generation of people who could potentially open new business, enticed with dynamic services and offerings.
The old banking model has to be re-evaluated to understand what consumers really want or need. In the past banks and credit unions have relied too heavily on time deposits and other high rate-deposits, but in today’s world, attracting more account holders adding to low cost accounts may develop more profitability in the long run.
Continue on the Path of Technological Transformation
Banks and credit unions can eliminate costs through reducing branches and some common in-branch functions to free up capital to offer lower fees and higher dollar incentives. In this way, banks and credit unions can win the race by outpacing the market in growth and by capturing new accounts at a higher rate then their competition. Also offering lower fees, and free checking can sometimes convince new account holders to abandon the competition and come to you.
Engage the Digital Age for Customer Growth
With the right combination of capturing and growing a steady supply of core non-interest bearing (NIB) demand deposit account (DDA) balances, banks and credit unions can thrive by winning new account holders over their competitors. It’s a new era in appealing to a digital account holder looking to either change financial institutions or just getting started in their careers.
Banks and credit unions must embrace the digital age to really thrive in today’s environment with utilization of social media, strong mobile apps, and low checking fees if they are going to survive in a digitally transforming age. The best way to appeal to new and existing account holders may be to reach out to them in their most comfortable environments for receiving information, namely a focus on mobile application and conveniences.
Since financial institutions haven’t had to compete in this environment in a long time, and learning from historical experiences may not be realistic . It may be time to implement a new strategy to meet these new demands in customer attraction and retention.