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Five Final Steps to Deposit Retention

January 8, 2019
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One last time! Following the positive feedback from so many Raddon Report readers on my previous deposit-retention recommendations, I have created a final list of tactics and strategies. I trust you will find value in these ideas as well.

  1. Create true relationship pricing based on total deposit and loan dollars. You can do this by granting both rate and non-rate benefits as the entire relationship grows. When you reward customers who have mortgages or other loans, you encourage younger depositors who may have significant balances but are put off by needing to maintain high minimums. Offering rewards based on revenue-generating products also justifies the expense of making the rewards attractive.
     
  2. Introduce a high-rate checking product that has requirements for earning rewards. These could be a certain number of debit or credit card transactions per month, e-statements or direct deposit. This type of checking account pays a very high interest rate but only on balances up to a certain amount, like $25,000. A reverse product like this limits exposure to cost of funds, attracts younger depositors, brings significant non-interest income from debit interchange and can be a good retention tool.
     
  3. Identify your customers in the consumer segments that are likely to have high deposit balances (middle income and upscale). Our research shows that, on average, middle-income depositors have $68,000 at all institutions and upscale consumers have $113,000. Find those customers who have less than $10,000 on deposit at your institution and entice them to bring additional balances to you.
     
  4. If your MCIF has a “high-balance” field, as the Raddon Integrator does, use that field to find customers who previously had significant deposit balances but who now do not. Target them with a “recapture” marketing effort.
     
  5. Reach out to your older high depositors to get contact information for their beneficiaries. According to Raddon research, 23 percent of all deposits are held by consumers who are at least 74 years old. For the average institution in our Performance Analytics program, 11 percent of depositors fall into this group, and they account for 30 percent of all deposits. A large transfer of wealth will occur in the coming years, and you will want to retain as many of these dollars as possible.

I hope that some or all of these 19 ideas help you retain deposits and grow your franchise. Happy New Year!