How to Increase Deposit Growth: 2 Proven Strategies for Banks

In a nutshell 🥥 Fluctuating interest rates. Rising loan demands. It’s no surprise that Canadian and U.S. banks are prioritizing inbound capital, particularly through stimulating core bank deposit growth. To succeed here, banks and credit unions should invest in intensive customer and market analysis; and innovate their product offerings and promotions using customer data to target the right audience. Lastly, banks should implement a seamless digital omnichannel strategy that optimizes customer onboarding and experience, and minimizes friction. This approach helps banks boost deposit growth among customers new and old, while staying fiercely competitive in a rapidly changing economy.

In the chaos of dizzying interest rate directions and an increasing demand for sizeable loans from customers, North American banks have their attention squarely focused on the importance of inbound capital. And rightly so.

Increasing the value in checking and savings accounts (and other deposit-based products) is now a primary focus across financial institutions, who are currently trying to puzzle out bullet-proof deposit growth strategies for banks.

Of course, this exercise can feel complicated at first for even the most established banking teams—but perhaps not as much as one might think. In an effort to demystify the process, the experts at Coconut Software (which specializes in bank appointment scheduling software, lobby management, and video banking) below highlight the core aspects of the most successful deposit growth strategies employed by leading banks.

Let’s get started.

How do you grow deposits in banks? 2 trusted ways to nurture more investments

From market research, product innovation, and promotion, to seamless customer experiences, here are two core ways that the world’s most successful banks are tackling the deposit growth challenge.

Strategy #1: Innovate your product and promotional approaches—based on rigorous research

Invest in research and analysis to identify opportunities.

Banks with longevity and established customer bases usually start with an analysis of existing accounts and balance sheets—as well as their deposit portfolios—to determine behavioural trends, market share, and opportunities to drive more high-value banking customers. Eight initial areas they usually scrutinize are:

• Concentration: Where are the majority of deposits concentrated?
• Share: What percentage of accounts control deposits?
• Retention: Where is the most deposit retention vs. bleed?
• Timing: When do bank deposit increases and decreases typically happen—and is there a seasonal or economic pattern?
• Demographics: What is the demographic profile of the customers who have the most concentration of deposits?
• Movement: When a deposit ‘leaves’, where does it typically go? Off the books, or to another account or investment?
• Investment habits: Which customers may have deposits elsewhere?
• Ratios: How balanced is the deposit to loan ratio and what factors impacted any changes there (i.e. rising interest rates)?

With a clearer understanding carved out by the above questions, you’ll likely be able to move into the next phase: making powerful product and marketing changes to stimulate deposit demand.

DYK? 🥥 According to Royal Bank President and CEO Dave McKay, bank deposits are the first place to look strategically when interest rates are rising. A key to ongoing success? Identify the customer portfolios that offer the most sustainability. And, build a strategy to maintain a core deposit value to mitigate any massive changes in the larger market. This will ensure growth:

“RBC has spent the last 15 years building low beta, core deposits, a focused concerted investment in our core deposits both on the consumer side and the business side. That has led to significant market share increase for us in the core deposit, low beta and zero beta business. Our franchise caters to the upper three quintiles in Canada and the upper decile in the U.S., so it focuses on where a lot of those surplus deposits have grown.”

Once you’ve identified the types of customers who are likely to support your bank’s deposit growth strategy, the next stage is looking squarely at optimizing your financial product offerings to reach them. There are a few ways to innovate here to nurture more deposits:

Deliver new products that stimulate investment.

Most traditional banks rely on basic savings and investment products that offer little benefit to your high-value customers. Think about securing new deposit capture by offering more flexible withdrawal and deposit schedules, high-yield savings accounts, waived account fees, or tiered interest rates. This will encourage customers (new and old) to see a long-term investment value vs. a simple deposit.

Cross-sell your financial products.

One of the barriers to deposit growth is the limited exposure customers have to your broader product suite—which is why it’s important to expose them to multiple products, even if they’re aiming to do just one thing. Think about ways to cross-sell existing products by adding deposit-first opportunities like the ability for mortgage loan customers to add personal accounts, or limited-time offers to entice them to add services or open no-fee chequing or savings accounts — promoted to them as added bonuses or options to the product or service they’re aiming to use.

Entice customers (old and new) with powerful incentives.

Banks with successful deposit growth usually focus their marketing efforts on the retention and growth of those who they’ve already identified as their top-yield customers. This is a good first step, as new customer acquisition can be expensive, so focusing on the existing customer base can initially skirt the high costs associated with new customer marketing.

To drive engagement from these customers, make them offers they can’t refuse, like loyalty programs, fee waivers, cash bonuses, referral programs, extremely competitive interest rates, or discounted product bundles that save on overall customer costs.

Answering the question of how to increase deposit growth in either new or existing customers does not rest solely on a bank or credit union’s product or marketing teams. Ultimately, whether in-branch or online, the level of client service and experience your bank or credit union offers will be a pivotal deciding factor for new or existing customers looking to invest in you—or not.

Strategy #2: Provide a seamless, frictionless customer experience for end users

Like your products, a financial institution should make new account creation and larger deposit amounts more enticing to customers by providing a truly audience-first, convenient journey and experience. Some of the ways successful banks invest in this relate to: 

Making onboarding even easier

No net-new deposits will emerge from a botched onboarding. Ensure customers are able to sign up for new accounts as easily and swiftly as possible — whether that’s in-person at a brick and mortar branch, or online via a mobile phone or desktop device.

Overall customer service

While a low-friction online portal will encourage more customers and ultimately more investment in bank deposits, high-quality, human-powered customer service is a crucial piece to invest in. Encourage your CS teams to nurture dedicated, long-term customer relationships by attending to challenges quickly, offering truthful advice over time, and making helpful investment suggestions that customers will be moved by—given the strong trust already forged.

A pivotal digital strategy

While online banking platforms have existed for years, the pandemic certainly expedited how much customers have come to rely upon it as a part of services. The benefit of always-on platform functionality for financial institutions means more after-hours opportunities to market deposit growth initiatives at multiple checkpoints in the online platform — no matter the digital device. 

Limiting friction and encouraging deposits with seamless operational efficiency in banking

Beyond the online banking and account management platform itself, you’ll need to think about how to best match customers with agents, expedite meetings that result in successful product sales, and generally provide a simplified booking and appointment managing experience. 

This can become tricky in a world where banks span both physical locations and the online realm. Some simple steps to take:

1. Remember mobile: Ensure your site is optimized for mobile, and provide a seamless experience between desktop and mobile, and avoid having customers re-enter their information.
2. Ensure your platform(s) is agnostic, and available in-browser and thus on any kind of mobile device.
3. Consider multiple ways of getting in touch, whether that’s via SMS, social media, on-site chatbots, via email, or over the phone. Work with a system that can capture every interaction on all channels so that your support staff or account managers can get the full picture and prepare to interact with the customer.

*BEST ADVICE*: Triple your bank deposit growth with appointment scheduling

Offering seamless online banking scheduling experiences—from booking appointments to tracking wait times at local branches — is key to retention and thus deposit growth. Trusted FI’s like Royal Bank and Vancity use this industry-leading bank appointment scheduling software to remove the friction from omnichannel banking. 

Consider implementing such a solution to provide your customers with powerful options like: 

• Online booking options
• Lobby management and queuing with real-time updates for customers
• The ability to seamlessly convert an in-person call into a video call
• Document- and identity-verification software
• The ability to provide customers with a list of all the things they need to bring—well in advance of their appointments.

BANK DEPOSIT GROWTH SNAPSHOT 🥥 Banks using Coconut Software to provide customers with improved omnichannel, online scheduling, and enhanced services see impressive results — and meet their deposit growth targets: An average 2.5% increase in new deposit accounts, $330k+ additional profit from new deposit accounts over 3 years, and a 10-minute reduction in time for deposit account opening appointments.

To fully understand the overwhelmingly positive impact Coconut Software can have on a bank’s branch optimization, revenue growth, and CSAT scores, read the Forrester Report, The Total Economic Impact of Coconut Software.🥥

Conclusion: Bank deposit growth ideas: It’s a team effort

Encouraging the growth of deposits in new and existing customers should know that this mission is not specific to one department. 

Frequently Asked Questions

What is ‘bank deposit growth’?

In a nutshell, bank deposit growth refers to the increase of the total amount of deposits held by banks, measured over a set period of time (think monthly, quarterly, or annually). They’re inclusive of several types of accounts including chequing and savings. 

What factors typically influence bank deposit growth? 

Generally speaking, there are many! But, inflation is a pivotal factor in encouraging or discouraging customers from investing their hard-earned dollars as deposits. So:

• If inflation is high and the perception is that the value of money is lower, customers may have less confidence holding their funds in banks. 
• Conversely, if the inflation rate is low, this may encourage a healthy spike in bank deposits.

What can banks (and credit unions) do to encourage bank deposit growth – and fast?

Financial institutions looking to nurture and expedite deposit growth should:

1. Start with market research and analysis, understanding the balance between existing customers and their concentration of deposits, where the vast share is, and where the most product innovation and marketing opportunities lie.
2. Offer competitive rates or incentives to new and existing customers, and
3. Provide a seamless digital omnichannel experience that makes it easy for customers to connect with the bank on any channel, and be served immediately.