PLEASANTON, Calif. (4/13/15)--Making it easier to break ties with previous financial institutions (FIs) and engaging members in habit-forming services during the onboarding process are key to boosting the likelihood that the credit union will become a new member's primary financial institution.
So says an independent study conducted by Javelin Strategy and Research and sponsored by Deluxe Corp. It analyzed revenue, cost of acquisition and cost of servicing new checking account customers during their first three years.
Credit unions and banks can boost the productivity of services $212 a year by turning inactive customers into fully engaged customers with onboarding that enables the customers to transfer bill payees and direct depositors, Javelin said.
"One in five new customers says it is too difficult to make a complete switch, a hurdle that leads to costly 'silent attrition--dormant, money-losing accounts held by customers who have effectively left the FI," Javelin said.
The findings "underscore that wooing a new customer is only half the battle," said Javelin. "The true test is how speedily and effectively FIs can win over customers when the relationship is tender and tenuous and whether they can achieve status as their new customers' primary bank or credit union."
Fully engaged customers are four times more likely than inactive ones to identify a credit union or bank as their primary FI.
Fully engaged customers own 2.7 times more financial accounts but also intend to open more accounts in the next 12 months.
Fully engaging new customers who believe switching FIs is difficult will result in an 8% increase in productivity in the first three years, while inactive customers represent a net loss. Checking accounts don't contribute to that increase. More profitable services include mortgages, credit cards, auto loans and home equity lines of credit.