4 Strategies for Deposit Growth

April 2, 2024   -  

4 Strategies for Deposit Growth

The coming quarter-century is set to be a period of significant upheaval for banks and other financial institutions, and that’s largely due to the Great Wealth Transfer. Over the next 25 years, Millennials and GenZers are set to inherit $72.6 trillion from Baby Boomers—a sum that will likely redefine the banking industry as we know it.

However, these new beneficiaries won’t just deposit that money back in their parents’ banks on their own. Unlike Baby Boomers, members of this tech-savvy generation aren’t always loyal to the financial institutions they do business with. Instead, Millennials and Gen Zers are two to three times more likely to switch banks than mom and dad, and they often make those choices in 90 days or less over a matter of a few interest rate points.

Of course, that doesn’t mean your bank can’t capitalize—you’ll just need to take some time to evaluate the strategies you use to drive deposit growth. By focusing on products and services that promote multigenerational banking, you’ll be able to take advantage of the windfall and make your institution competitive for decades to come. 

Prioritize These Deposit Growth Strategies 

These days, successfully pursuing short-term and long-term deposit growth takes more than just offering decent interest rates. That’s because younger people don’t just switch banks more often than other customers—they’re also willing to look beyond traditional banks for their financial needs. In fact, 90% of Gen Zers say they would consider opening a banking account with a nonbank company. 

That means they’re looking at institutions that deliver what they want, not just a long reputation offering traditional banking services. 

To stand out in this broader field of competition, you’ll need to rethink everything, from how people sign up for accounts at your bank to what services you provide to your customers. Here are some of the most important areas to consider:

1. Put Data Analytics to Use

The average bank has access to a massive but often underutilized resource—its customer and portfolio data. If your bank uses this information to adopt a data-driven approach to market segmentation, you can effectively target customer bases and segments where deposit growth opportunities are plentiful. At the same time, you’ll be able to “work smarter, not harder” by not focusing on areas where minimal deposit growth opportunities exist.

2. Focus on Operating Accounts

Operating accounts can be easy to overlook, but these are low-margin deposits connected to multiple financial flows and treasury services, resulting in a high level of stickiness. Since it’s unusually difficult to move these accounts to another institution, it’s in your best interest to build relationships with the customers holding them and encourage them to make additional deposits.

3. Simplify the Onboarding Process

According to research from the Bank Administration Institute, 79% of Millennials have opened deposit accounts online, and 58% of Gen Z members prefer to open these accounts through desktop and mobile apps. That means utilizing digital banking technology for your onboarding process won’t just reduce friction—it can make it easier to form relationships with people in younger age groups. 

Remember: they switch quickly. Make your bank simple to engage and then give them great reasons to stay for the long term. 

4. Offer Legacy Planning Services

The strategies listed above can help banks attract and retain customers (and their deposits), but they don’t fully address one of the biggest issues financial institutions face today—the fact that Baby Boomers tend to have meaningful long-term relationships with their banks while their kids just don’t. With the Great Wealth Transfer on the horizon, this could spell disaster for banks that aren’t fully prepared.

To avoid the worst-case scenario, focusing on the numbers won’t be enough. Instead, you’ll need to build emotional connections that translate to wealth with clients of all ages. Offering legacy planning services is one of the top strategies for developing these connections: two-thirds of all U.S. adults don’t have a legacy plan in place, and helping them set up their future is a great way to establish relationships that go beyond the surface level. At the same time, focusing on services like these will help your customers view finance as something connected to their own families, making it much easier to earn their loyalty.

How The Postage Can Help

Most banks aren’t prepared to introduce legacy and estate planning services on their own. To reap the benefits associated with these services, you’ll need to find a life planning and succession software platform built with financial institutions and their clients in mind.

At The Postage, we take pride in offering the perfect platform for institutions like yours. When banks work with The Postage, they typically see an ROI increase greater than 300% within months. (That’s considerably higher than the financial benefits provided by other strategies.) 

That said, The Postage isn’t just any fintech. While our services can certainly help banks increase their deposit growth and enjoy other financial benefits, we focus on relationships over transactions. By using our people-first platform to deliver the following services to your customers, you’ll be able to build real connections with your clients that can last for generations.

Legacy and Estate Planning

With the help of digital platforms, younger and older family members can share information about their assets and work together to plan for the future. Here are some of the most important details to organize:

  • Documents and data. Your clients’ loved ones need all kinds of information, including wills, account numbers, passwords, insurance policies, and many other details. Knowing everything will be easy to find can deliver incredible peace of mind while bringing beneficiaries into the banking conversation. 
  • Estate details. Your bank can also help protect and manage crucial information about clients’ assets, such as their deeds, broker information, inventories, and insurance details. Once again, these are opportunities to get everyone in the room to have a long-term financial conversation.
  • Messages and memories. In addition to the documents and details listed above, many clients looking for estate planning services want to store pictures and videos in digital vaults. The Postage goes the extra mile by providing timestamp features, making it easier than ever to look through these sentimental materials.

Succession Planning

When businesses have a strong succession strategy in place, they can keep running smoothly no matter what happens. On the other hand, leaving things to chance can result in a high level of instability that degrades wealth and breaks down multigenerational financial relationships. 

Because of that, you’ll want to be ready to help the businesses you work with prepare for the future—especially small and medium businesses (SMBs). In the next five years, 67% of all SMBs are expected to change hands, and just as many don’t have a succession plan ready to go.

To take advantage of this opportunity and strengthen your relationships with SMBs, be prepared to assist them with:

  • Details and assets. When you’re in charge of a business, the devil’s in the details—and when the time comes to hand over the keys, it’s critical for the next person in line to have all the information they need. With the aid of digital legacy planning services, business owners have an opportunity to organize all their contacts, accounts, and other important data well in advance. 
  • Vital documents. Companies must also keep track of the documents that outline their processes, protections, and future plans.
  • Succession strategies. In order to avoid difficulties while changing hands, businesses need a clear line of succession and a strong understanding of how this process will play out.

Take the First Step Toward Future Deposit Growth

Though Millennial and GenZ loyalty to banks is declining, there are still ways to build lasting relationships with people in this category. Thanks to our platform’s robust feature lineup, user-friendly interface, and focus on meaningful relationships, The Postage can help banks increase deposit growth, add new accounts, and benefit from extra non-interest income.

Between individual legacy planning and SMB succession planning, The Postage’s services address an obtainable market of more than $15 billion. If you’re ready to make your bank the right place for forward-thinking customers in this market, we’re ready to help. Get started by booking a demo of our services today!