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Personetics Guide

How Can Banks Increase Deposits

Deposit Strategies for Banks 

Banks grow by growing deposits so they can make more loans.  Today, interest rates are historically high and staying there.  These “higher-for-longer” rates make growing deposits especially challenging: Even as banks raise the rates they pay, they find it hard even to keep the deposits they hold now.  But smart deposit growth strategies for banks don’t depend just on paying higher rates.  Here are ways in which traditional and “digital-only” banks are increasing deposits 

Traditional bank strategies to increase deposits:

Traditional banks maintain branches as well as digital banking and offer a range of products and advice. Successful traditional banks are deploying several strategies to increase deposits:  

  • Become an indispensable assistant. Banks that hold a customer’s checking account can scan transactions to spot duplicate charges, opportunities for the customer to earn rewards, and avoid fees.  By delivering this return on a customer’s transaction data, the bank can earn more business from the customer, potentially including more deposits as the customer comes to rely on the checking account even more. 
  • Help customers with goal-setting and incremental saving.  For consumers capable of saving $25 or $100 a week, the rate paid on savings isn’t the sticking point; it’s motivation and ease.  Banks that can size up a customer’s capacity to save, encourage the customer to set savings goals, and routinizing saving with intelligent, automated safe-to-save transfers create better financial outcomes for the customer while growing deposits that stay with the bank longer.  
  • Find and respond to deposit growth opportunities quickly.  In the hands of most customers, checking accounts are money hotels—money comes in and goes out quickly.  Banks that can spot quickly new deposits that may soon leave for accounts elsewhere can make real-time offers of promotional CDs, investment services, or other opportunities for the customer to benefit by keeping the funds with the bank.  

Digital-only bank strategies to increase deposits:

Digital-only banks (which may consist of a bank or a non-bank fintech working with a bank), often pay higher rates on deposits than do traditional banks, but leading digital-only bank deposit growth strategies also rely on more than just the rate paid: 

  • Balance marketing strategies to increase deposits with the rate paid. Some consumers search actively for the highest rates for their savings.  These “hand-raisers” care more about rates than a well-known brand; banks seeking these customers must pay high rates but can spend less on brand marketing.  Other consumers think about moving their savings because they see an ad from a digital-only bank they know.  Banks seeking these consumers should spend on top-of-funnel marketing, both to reach these consumers and to position the bank as a logical choice. 
  • Make it easy for the customer to save. Digital-only banks enable recurring deposits from accounts at other banks.  On its own, this feature is only so effective—the customer is faced with the choice of setting a low dollar amount or constantly checking to make sure the size of the deposit doesn’t create a shortfall at the other bank.  Smart digital-only banks use intelligent automation that calculates how much is safe to move over, allowing the customer to save more with confidence while increasing the deposits the customer holds with the bank.  

With rates now higher for longer, customers can expect higher rates on their deposits. While all banks are responding with higher deposit rates, the edge in deposit growth will go to banks that look at more than just the rate in building their deposit growth strategy. 

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