After years in the basement, loan and deposit rates have been rising for a while, and at many credit unions, the deposit pendulum has swung from “Yikes! Deposits are spiking! We need to make loans!” to “Eek, we need deposits!” again.
To help you tune up your deposit-fu, here are five ways you might be losing out on deposits – and what to do about it.
Talking only about your fantabulous APY
Sure, when it comes to deposits, the APY is the star of the show. But don’t neglect to tell your credit union’s story, too. For example, you’re local – instead of getting sent somewhere else, your money stays in the community and goes to work right here, making life better for your friends, family, and neighbors.
That kind of thing really is a strong differentiator; money is power, and people like feeling that their money is doing some good in the world.
Features and convenience are another great way to differentiate. Even small differences can be key, like a step-up option if rates go up, or an opportunity to add more money halfway through.
Not planning ahead for the rate chasers
If you market a spiffy kookoo kokonutz special certificate or money market rate, understand that of course you’re going to attract some rate chasers who only have eyes for that big juicy APY.
That’s why it’s important to think about how these folks think, and make a plan for making the most of these relationships in the future. Rate chasers almost certainly have more money stashed here and there, and they’ve already proven they’re motivated by deposit rates. Keep the offers coming.
For example, you’ll have some rate chasers who are existing members. Look at your data and ponder what’s interesting about their product mix. What will you offer them next to extend and deepen the relationships?
And of course, some rate chasers will be new members. Like indirect loan members, these folks often aren’t interested in being involved. It’s notoriously tough to get them to, say, get a car loan or checking account. However, they could be a reliable source of deposits to plug those ALM holes in the future.
Lastly, plan for maturity. Make sure you have a plan and an offer ready to go and on their minds before the maturity date.
Not inviting members to the party
Everyone needs membership growth, too, and a tasty offer for new members only seems like an ideal way to get a two-fer. But your existing members are the ones who got you where you are today – and they’re the ones most likely to actually pay attention.
Make sure you extend an offer to existing members, or give them some other way to benefit, like a referral bonus for new members.
You can also stipulate that the deposit must be new money, from a source outside the credit union. That message is easy to overlook if it’s buried in a disclosure, so make sure it’s easy to understand, or even central to the creative.
Still, each condition requires more fine print and reduces marketing effectiveness, so try to keep restrictions to an absolute minimum.
Pesky clouds of not-so-fine print
Features and gimmicks can be fun, interesting, and effective, but only if they’re understandable. Keep your offers simple and easy to understand accurately at a glance.
To look at it another way, fine print is a type of risk because it can greatly decrease trust and marketing effectiveness. If you make a big promise in the headline, but there are four paragraphs of fine print explaining the terms and conditions, no one’s going to believe it. Work with your compliance folks to keep the need for fine print to a minimum.
Resist the urge to pile on features, incentives, bonuses, and door prizes. Make one point, and stick to that.
Thinking about certificates only
Certificates are a great way to plug holes and to quickly gather deposits. But don’t overlook the slower ways of accumulating deposits. These can be great ways of deepening relationships and building a more durable, diversified deposit base with a lower cost of funds.
For example, a “Saver’s Certificate” with a lower minimum and regular automatic deposits can help younger members start building financial security painlessly. Or combine that with a “round-up” feature for vacation or Christmas savings. Show your members how they can create savings accounts with different names, and set up regular automatic transfers to plan ahead and save up for different purposes.
Or put together an innovative new type of account. And of course money markets are a great midway point for many members if they’re not completely comfortable with “locking up” their money in a certificate.
As you crank up the deposit marketing machine, make sure you keep these principles in mind. And if you need a hand with your membership growth strategy, a killer deposit marketing campaign, or even turning your credit union’s website into a growth machine, we’d love to hear from you!
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