Karen Kislin, strategic adviser with Raddon, offers three tips for building deposits with your existing membership base.
Kislin says the old adage that 20% of your members or customers hold 80% of your deposits has actually shifted to about 15%/85% in recent years. It’s vital to identify that valuable segment of your membership.
“That’s your lowest hanging fruit,” Kislin says. “We typically urge clients to look at depositors of $20,000 or more, but we have seen in our research that when you look at $50,000 or more in aggregate deposits, those relationships are more inclined to be rate shopping as well.”
Kislin says with the emergence of online competitors, credit unions have to track this segment on a virtually daily basis. “The competition is fierce in the financial industry, and it’s easy to switch accounts online now,” she says. “That’s why these online banks were created.”
‘We recommend rewarding them by offering them higher rate money market accounts.’
Kislin advises credit unions to determine which households have higher deposit balances and market to them with a goal of deepening relationship to reduce the risk of those deposit balances leaving.
Consult the 2019-2020 CUNA Environmental Scan for more information about credit union deposits.
“We've seen that there's a high correlation of consumers bringing more deposits over to what they consider their primary financial institution. And that absolutely starts with checking,” she says. “Go back to those branded high depositors, especially those with active checking and direct deposit, bill pay, and debit cards. We recommend rewarding them by offering them higher rate money market accounts.”
United Federal Credit Union, with $2.7 billion in assets in St. Joseph, Mich., does just that, by offering members with checking accounts a 0.5% bump on money market account interest rates. United believes that deep relationships begin and end with the checking account.
“We have a very solid and very easy-to-understand checking suite,” says Erin Hennessy, United’s chief innovation and marketing officer. “Built around that we have some great share certificates, bump-up CDs, liquid CDs, and various money market accounts, but it’s all structured around that primary checking.”
Raddon’s research shows that 11% of retail household relationships found at financial institutions are headed by a customer over the age of 71. These households also hold an average deposit balance of $44,000.
Kislin says credit unions should establish a brand that with a message that is there for the entire family’s banking needs. “When you approach your traditional head of household, make sure that you're talking to them about their overall financial planning, and you have notated their next of kin within your system, with permission to reach out to them accordingly,” she says.
“Then, when you are reaching out to the next of kin, make sure you're educating them about the benefits of banking with your institution, the features that you have, the benefits of maintaining those deposit balances to help diversify their portfolio in the future.”
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