Weathering the storm: Deposit marketing strategies for turbulent times

In a recent report by the Bank Administration Institute (BAI) on the state of the U.S. deposit market, ominous clouds are forecasted to loom over banks and credit unions, hinting at a potential negative growth trend in deposit balances throughout 2024. Factors such as persistent inflation, the resurgence of student loan payments and pent-up spending among the mass affluent are exerting relentless pressure on deposits, painting what could be a bleak picture for financial institutions.

In the face of these challenging conditions, resilience in deposit marketing strategies is more important than ever. “There’s a natural tendency to want to wait out the storm by pulling back on deposit marketing,” says John Tracy, VP of data-driven marketing at Deluxe. “But it is the financial institutions that continue their deposit marketing, despite gale-force headwinds, that tend to do better after the storm passes.”

Marketing strategies to safeguard deposits

But how long is this storm expected to last? The BAI report predicts an end is in sight, specifically that “2025 is when banks can expect a return to positive deposit balance growth for consumer and small business accounts.” In light of these projections suggesting a potential turnaround in the next year or two, financial institutions should plan to spend all of 2024 deploying deposit marketing strategies designed to “stop the bleeding,” as well as marketing strategies focused on core deposit growth.

Here are some key deposit marketing strategies that marketing teams should be prioritizing:

1. Protecting existing deposits

• Introduce or promote in-app budgeting tools to help account holders track their spending and make wiser financial decisions.
• Partner with a third-party vendor that can help customers with student loan debt to consolidate or reduce their payments. By lowering their payments, the customer will have additional money available to save.
• Add additional retention incentives or products for high-balance customers to keep them from moving balances to higher yield accounts elsewhere.

2. Increasing share of wallet

• Bundle products and services to incentivize customers to move funds housed at other institutions to yours so they can access higher rates, value-added services and additional rewards.
• Add trigger marketing programs to identify customers who are on the verge of making important financial or purchase decisions and might be considering another banks or lenders.

3. Acquiring new customers

• Refine customer segments to reflect updated consumer data, behavior patterns and institutional objectives to target acquisition efforts effectively.
• Evaluate how additional data attributes and updated predictive models could enhance marketing ROI.
• Implement trigger programs focused on lifestyle, household, or small-business events - timing is everything!
• Test incentives and messaging against a control group to determine the effect on response.

4. Enhancing customer experience

• Remove sources of friction from the online account-opening process so your responders don’t abandon the application.
• Add additional personalization, rewards, gamification to enrich the customer onboarding journey.

Looking beyond the clouds

While the current forecast for deposit growth appears gloomy, seasoned veterans of financial services marketing understand that this storm too shall pass. Eventually, deposits will rebound. In the interim, every strategic decision made will shape the institution's ability to thrive when the deposit environment improves.

Although the road ahead may be fraught with challenges, financial institutions should remain steadfast in their deposit marketing efforts. Remember, in the realm of deposit marketing, foresight and adaptability are the guiding stars towards a brighter future. By adopting innovative strategies and maintaining a focus on customer needs, banks and credit unions can weather the storm and emerge stronger on the other side.