Checking account growth initiatives have taken a backseat to loan growth in 2021 as consumers remain flush with deposits. However, acquiring new checking accounts remains an important milestone to obtaining loan growth. Here are 3 ways your institution can compete & win the war for these coveted relationships.
By: Rich Givone, SVP of Digital Marketing Strategy, CS3 Marketing
For the last twenty five years, data has consistently borne out that 20-25% of American households are evaluating a change in banking services on an annual basis. While that pace of change may have deviated somewhat in 2020 as a result of Covid-19, at the midway point in 2021 we are again seeing a very active marketplace with robust offers to win both checking and lending relationships.
But the results are growing more lopsided: the three megabanks have an outsized share of the new primary checking account market, and continue to acquire accounts at a disproportionate pace. They are particularly effective at winning new Millennial customers: not only because of digital account opening, but thanks, in part, to a diverse and seamless range of mobile banking capabilities.
Community banks and credit unions will find it nearly impossible to beat the megabanks at this game – but they can in fact compete in other ways. Here are three ways to win the Acquisition war:
- Establish A Beachhead. Instead of trying to compete head-on with the big banks to be consumers’ primary checking account provider, community-based institutions and credit unions should strive to establish a foothold in consumers’ financial lives by being their secondary checking account provider. Research from Cornerstone Advisors in 3Q 2020 indicated roughly a third (35%) of consumers have more than one checking account, with 8% indicating they have more than two accounts in their name. When they most recently opened an account, 46% opened a secondary checking account. Consumers choose a secondary account for a wide range of reasons including branch locations, better interest rates, better rewards, and better personal financial management tools – areas where community banks & credit unions typically have a leg up.
- Tip: Be sure to onboard and engage new accounts whether they view your FI as a secondary account or primary account. Cross-sell will occur only through engaged customers, regardless your primacy.
- Send In The Digital Troops. The age-old method of modelled direct mail campaigns to acquire checking and other accounts worked, and continues to work: but at a price. Each mail piece – each “analog impression”, if you will – costs north of $0.45 in most cases, when factoring the mailing and the postage cost. So – what to do? Take the best parts of the old modelled campaign discipline, and – instead of sending mail – serve digital ads through a variety of methods to achieve comparable response rates, at a fraction of the cost.
- Tip: Work with a partner who has the digital chops specific to new account acquisition solutions, and who has deep experience in modelled campaigns.
- Don’t Let Your Guard Down. Two out of three potential switchers have only one bank in mind when they start thinking about switching to a new bank. 38% report only having seriously considered one bank, when surveyed after opening their new account. Of those who were certain of their interest in one bank brand as they began to think about a new bank, 90% did in fact open an account at that institution. In other words, to be effective in acquiring new checking households, your brand must in the consumer’s mind 24/7/365 – you need an “Always On” marketing program.
- Tip: Deploy a bundled approach to acquisition: 5-8 modelled digital campaigns per year, always-on campaigns such as digital Refer-a-Friend, loyalty and rewards programs, and brand advertising to provide air-cover.
Whatever tactics you employ to acquire new checking accounts and to grow loans, there’s renewed opportunity in the sector in 2021. Heading into 2022 budget season, now is the time to get creative in how you win your share.
Rich Givone is Chief Revenue Officer for CS3 Marketing. Having begun his early career in banking, over the past 20+ years Rich has held senior leadership positions serving the banking vertical in companies specializing in digital publishing, digital marketing, adtech, and martech.