Driving Deposit Growth: Overcoming Challenges and Maximizing Opportunities
Deposit growth remains a trending topic as we transition into 2024. Our Aurora Advantage core + digital team is here to explore challenges many banks and credit unions are facing. We’ll also discuss the importance of deposit growth and how effective strategies such as account cross-sell and relationship pricing, coupled with a strong digital presence can help to overcome these hurdles.
Let’s start by identifying the importance of deposit growth. We’ll narrow our focus to 3 key areas:
- Stability and Liquidity: Deposits provide banks and credit unions with a stable source of funding, enhancing liquidity and ensuring a solid financial foundation.
- Lending Capacity: A healthy deposit base allows banks and credit union to increase their lending capacity, supporting economic growth within the communities they serve.
- Diversification of Funding Sources: Driving deposit growth enables financial institutions to diversify their funding sources, reducing dependence on external markets and enhancing financial resilience.
Next, let’s identify challenges FI’s are facing to drive deposit growth:
- Low Dividend Rate Environment: In a low-dividend-rate environment, attracting deposits becomes more challenging as customers seek higher returns elsewhere.
- Fierce Competition: FI’s face stiff competition for deposits from traditional banks, online banks, and FinTechs.
- Changing Member Behaviors: The rise of digital banking presents increased costs along with challenges in engaging and retaining customers in traditional deposit products.
Now, on to the good stuff. What strategies can CSPI’s Aurora Advantage core + digital solutions offer to overcome some of these challenges?
- Account Cross-Sell (ACS): Leverage customer data at your fingertips. Our predefined fields help identify cross-sell opportunities to better market to your members.
- Relationship Pricing: Implement relationship-based pricing models to reward and retain loyal customers/members. Offer tiered interest rates, discounts on additional banking services, or other perks for members with multiple accounts.
- Digital Innovation: Enhance banking convenience, consider implementing a seamless digital experience. Introduce an end-to-end online account opening application using platforms like Aurora Launch. This will guide members through the onboarding journey, from account application, built in OFAC and credit score checks, ID verification, account funding and more, making the entire process efficient and user-friendly.
By overcoming challenges with strategic initiatives, financial institutions can not only attract deposits, but build lasting relationships with their valued customers and members.
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