For years, financial institutions have enjoyed the abundance of low-cost deposits. Today, we are in a new era of banking, with deposit acquisition becoming a significant point of focus for most credit unions.
The change represents another consequence of the Federal Reserve’s decision to raise short-term rates which influences the mortgage market, stocks and other corners of the economy. (1) Higher-rates available in money-market funds and other investments are luring consumers to move their money out of minimal interest-bearing accounts.
Adding to the challenge, the competition for acquiring new deposits is coming from not only big banks but from new digital players. In a rising rate environment coupled with a healthy economy, achieving deposit growth goals is one of the best ways to control funding costs while meeting the lending needs of members. Could data analytics be the game-changer to best understand member behavior and motivations to attract, win, and keep new deposits?
Here’s how you can maximize your member data for greater deposit growth:
Segment Your Existing Members
Member segmentation allows the credit union to divide specific target markets and member commonalities into more specific groups. By tracking and measuring important indicators in a member’s life – age, gender, marital status, income, a move, and more – you can segment members into easily targeted groups. This is important for optimizing marketing spend, effective reach and for acquiring deposits. Segmenting your members will help the credit union target the right member for the right deposit programs. Using data analytics, you can successfully segment your members’ data to create personalized, compelling marketing messages that are relevant and allow you to cater to your member’s needs—leading to potential deposit acquisition opportunities.
Create Member Acquisition Programs
Consumers have tons of options when it comes to financial services. Attracting their business requires smart, personalized marketing. Do you know which of your products consumers are more likely to use, or the segments which represent the strongest growth potential for your credit union? Through data analytics you can target the high-growth, high-opportunity member segments, create more relevant messages and product offers and promote your deposit services to the right prospective member, with the right message, at the right time.
Maximize Cross-sell Opportunities
I’ve mentioned before, the cost to acquire new members is ten times more than cross-selling/up-selling to existing members . Cross-selling deposit accounts to existing members is one of the best ways to grow core deposits. Through analytics you can gain a deep understanding of your existing members wants, needs, products and service offers and execute effective cross-selling initiatives. Data analytics helps you determine current product penetration and propensity by member as well as any gaps in products within your existing member-base. An analysis of existing member behavior can lead to efficient cross-sell of products. These efforts can drive an increase in member engagement while ensuring your credit union is maximizing all opportunities to promote high-interest yielding deposit accounts to your existing members.
Execute Retention Strategies to Keep Members
Controlling attrition is a top priority for credit unions. A change in address, marital status, or even a change in job status can lead to a member switching financial institutions. By using data analytics, credit unions can take proactive measures to understand and analyze the factors which might trigger thoughts of attrition in members. Using member data, credit unions can dramatically improve their ability to anticipate member behavior and key life events at an individualized basis. Data analytics is helping credit unions gain greater insights into their member’ needs, preferences and likely behaviors that lead to attrition. This valuable information enables the development of member loyalty strategies that strengthen the credit union’s ability to retain the members that are costly to attain.
Fine-Tune Marketing Messages
With the amount of the data now available, credit unions can create individual messaging to members and prospective members. This is a crucial factor for success in a time when deposit growth is critical. Analytics can empower the credit union to access extremely granular and detailed information on each member and allow marketing departments to send promotions on deposit services to each member segment based upon their specific needs and financial objectives. Emphasizing this personalized approach to marketing will allow members to feel a more personal connection with your credit union.
Deposits fuel revenue and the lending operations of the credit union. Without deposit growth, credit unions could face the challenge of reining in lending or pursuing more expensive funding.
Those credit unions that recognize the strategic importance to focus on deposit growth through data analytics will be the most successful in this competitive environment. Is your credit union looking for support to help maximize your member data? The Knowlton Group can help you devise a plan to put your member data to work.