3 strategies – starting with fast onboarding – to help banks boost deposits

Amid today’s higher interest-rate environment, growing deposits is a top priority of America’s bankers. So how can banks proactively accelerate their deposit growth and enhance their primary banking relationships?

Three strategies worth exploring:

1. Onboard: Acquire new depositors
2. Grow: Enhance the deposit relationship with current account holders
3. Cross-sell: Use data to understand what account holders need and then deliver.

Strategy 1: Digital onboarding – mastering new deposit acquisition

Taking a cue from digital neobanks, which in recent years have dominated new checking account openings according to Cornerstone Advisors, banks enhance their ability to digitally onboard new account holders and execute on the below tactics.

Design and deploy an “online shopping” experience: Consumers accustomed to shopping online with same-day delivery expect a similar fast-turn digital experience from their financial institutions. Traditional financial institutions aiming to attract new depositors should focus on enhancing their user interfaces, especially for mobile devices, to offer an exceptional and intuitive digital experience that meets or surpasses industry standards.

Open and fund an account in minutes: Banks able to vet and enable new consumers to complete the digital account opening process in under five minutes will more likely capture these depositors to become account holders. Real-time identity verification, flexible funding methods and seamless core and digital banking integrations are critical components to ensuring a positive user experience for new account holders.

The faster new depositors are onboarded into an institution’s digital banking platform, the sooner the institution can begin forging a long-term banking relationship.

Strategy 2: Grow by winning at deposit relationships

Financial institutions have a direct path to increase their deposits through expanding the relationships with existing depositors, particularly frequent digital users. Highly active digital banking users who access their mobile app or online banking multiple times per day have 1.71 times the number of products with their primary financial institution than those accessing digital banking at least once a year.

Savvy banks cultivate their relationships with highly engaged digital banking users by delivering on-demand banking tools which allow account holders to not only easily open new deposit accounts and fund them but also to receive funds and deposit checks. Two of the top features that make a major impact on account holder satisfaction while also working toward an institution’s goals to win the deposit relationship are:

1. Remote deposit capture (RDC)
2. Direct deposit switch

Direct deposit set-up and switching is traditionally a slow and tedious process, taking multiple pay cycles to implement. In an April 2023 survey of banking customers, 40% of respondents called the ability to set up direct deposit via mobile access “extremely valuable,” making it the most demanded online account feature out of 34 options presented.

By offering account holders direct deposit set-up digitally, banks can enhance their primary banking relationships. Remote deposit capture (RDC)—enabling physical checks to be scanned into users’ electronic devices and cleared electronically—is the optimal solution for the 78% of consumers who manage their finances through a digital banking solution, based on the 2023 Forbes Advisor U.S. Consumer Banking Statistics study. RDC enables users to safely deposit checks via their mobile and desktop devices, saving them the time and expense of visiting a brick-and-mortar branch or mailing a deposit. It also helps banks streamline their check processing.

These tools not only simplify and expedite financial transactions but also solidify the bank’s position as a primary financial institution in the eyes of its account holders. This strategic approach is key to deepening deposit relationships and sustaining long-term account holder loyalty.

Strategy 3: Cross-sell by turning data insights into deposit action

A 2022 survey of 1,500+ digital banking customers found 73% saying that relevant product suggestions would make them more likely to trust, be loyal to, try new products from and/or recommend a financial institution. Banks can accomplish this by mining available first-party data.

This transaction and digital channel behavioral data reveals a holistic view of an account holder’s financial journey, using those insights to send educational and promotional communications that match the users’ journey stage and needs.

Actionable insights derived from that data can provide financial institutions the intelligence to attract the right audience of depositors. Technologies that support these data insights, predictive artificial intelligence modeling and financial services marketing automation can prove beneficial for banks.

The process for executing a data-driven, predictive and automated operation is: Determine a business goal based on data about a specific audience of banking account holders.

For example, a bank might target account holders who make an unusually large deposit, indicating a potential opportunity to cross-sell a certificate of deposit. Or target those account holders sending money to competitive institutions for executing win-back campaigns.

1. Based on the desired goal, create a product offer and communications campaign tailored to the target audience, to be deployed across multiple channels.
2. Monitor the efficacy of the campaign, using an end-to-end attribution dashboard that’s been programmed to also measure a bank’s return-on-investment for the campaign.

That’s the marketing path taken by Ideal Credit Union, a $1 billion asset financial institution based in Woodbury, Minn. Confronted in 2022 with a small new money growth of $330,000 through the first six months of the year, Ideal at mid-year put into motion five different audience-specific digital marketing campaigns to attract new money. In July 2022 alone, Ideal attracted $5.2 million in new deposits—nearly 16 times the deposits attracted in the prior six months.

As banks harness account holder data for insights, cross-sell and campaign targeting, it’s crucial to prioritize data privacy and regulatory compliance. Financial institutions must adhere to stringent data protection laws and ensure they are compliant with new or changing regulations. Banks should employ a layered security approach including encryption, access controls and anonymization techniques to safeguard account holder information.

Additionally, it’s essential to continuously update these practices in line with emerging data privacy standards. Aligning with the compliance team will safeguard the institution to deploy the strategies outlined above, while giving banks the power to boost their deposit growth both with current account holders and through acquisition.

Putting it all together

According to the December 2023 BAI Banking Strategies Executive Report: 2024 banking outlook, deposit growth is the No. 1 business priority of bankers. With consumers trying to make ends meet draining their savings and checking accounts, to the wealthier class moving cash into higher return deposit and investment accounts, financial institutions must keep a pulse on the economy, the industry and interest rates to remain competitive.

Leveraging data insights to deliver relevant messaging, products and services to the right audience can catalyze financial institutions to achieve deposit growth, increase share-of-wallet and capture loyalty.

Har Rai Khalsa is Vice President, Product Management and Mark Leher is Director, Product Management at Alkami.