Deposit growth is a boon for consumers and a burden for community financial institutions right now — we’ve seen it in the data since the pandemic and subsequent government stimulus set in. It’s a small relief that many of those deposits have relatively little interest expense, but that is a two-edged sword when it comes to loan growth.
Time deposits form a stable base for growing loans, and you pay for the stability with interest. Most demand deposits have a low cost of funds, but are prone to “flight,” especially as people seek to reinvest.
Here’s more good news though: the volume of deposit growth is massive enough that it would take a truly unprecedented exodus of dollars to put community institutions on the hunt for more. That means you can safely shift your focus to redeploying those deposits into loans.
Push Your Loan Marketing
Research by CMO Council shows 65% of chief marketing officers expected to increase marketing expenses in 2021. The data has shown that expectation was followed by action: marketing budgets for financial institutions grew significantly in the second quarter of 2021.
That’s a solid indicator of where the competitive landscape is going for marketing in general. Some industries such as travel and auto sales pulled back on marketing, leaving ad inventory available for the taking.
When you consider that 22% of consumers intend to switch banks thanks to Covid — the opportunity for community financial institutions to acquire new account holders is ripe.
A question that many financial institutions are asking themselves is, “What’s working right now?” They know that their consumer credit portfolios look very different from past recessions; credit card usage has been unusually low, but so have many other categories such as home equity, mortgage and auto. As recently as the second quarter of 2021, credit usage has begun shifting. It still hasn’t returned to pre-pandemic levels.
Based on data from the more than 700 community financial institutions we work with, we can identify areas of peak performance. For instance, we saw a remarkable trend with institutions offering the reward checking accounts and loans we provide:
- When an account holder started by opening a Kasasa checking account, they were 68% more likely to bring in larger loan balances than people with standard free checking accounts.
- When an account holder opened a Kasasa Loan, they were bringing in 52% more in loan balances than people with standard free checking accounts.
It’s possible to attract highly engaged account holders if you have the right products and the right marketing strategy.
Diversity Matters in Financial Marketing
If you’re already using paid search, programmatic media buying and direct mail, that’s excellent. The most important factor for making these channels drive growth is to continually optimize. Dive into the numbers with your team or your agency and find ways to make the program run more efficiently.
If you’re unfamiliar with these channels or would like a refresher, here’s what we see working with our clients from a marketing perspective:
This tactic is all about reaching consumers who have the intent to purchase. They’re searching on Google for a product or service, and you want to get their attention at the moment when their intent is strong. 90% of loan and mortgage customers start their journey online. Your products should be the ones they see first, ideally in the top four search results returned by Google for your geographic area.
In order to position your products competitively, you need to examine how other institutions and lenders are ranking for similar search terms. That allows you to evaluate your own offering and make changes that can help your visibility.
Programmatic media buying
While you may be familiar with digital display ads, programmatic media buying encompasses conventional display ads, along with video and audio streaming. It covers retargeting, which allows you to directly advertise to people who have already visited your website. Programmatic media buying allows you to “follow” consumers with ads as they navigate the wider internet.
While this may appear as though you’re watching consumers very closely, in reality, you’re just embracing the fact that many people look before they buy and will often respond to subsequent reminders. Everybody is busy — programmatic media allows you to stay top of mind for consumers who have shown an active interest (i.e., visiting your website) but haven’t taken action.
However you feel about direct mail, we’ve seen consistent and impressive success with direct mail. It helps you create multiple touchpoints across multiple channels — a hallmark of successful marketing campaigns.
There are also other indicators that are strengthening the case for direct mail. Thanks to Covid, most everyone has learned how to engage with QR codes. These “Quick Response” codes can be customized and scanned by a consumer using a smartphone. QR codes are a simple, elegant way to bridge the gap between a piece of mail on the kitchen table and your digital experience.
When you leverage a QR code with an engaging landing page, you can maximize what direct mail can do for your consumer acquisition efforts. People are also spending more time at home, which means every piece of mail has more of a chance to get noticed.
Millennials and Gen Z prefer to research their purchase decisions online. That means that there are millions of consumers that you can reach with blogs and other content when they are early in their consideration phase. Blogs, social media, and native ads are great ways to drive engagement and conversion. They’re also a great way to build trust with your audience and credibility for your brand.
Driving traffic and increasing conversion
Marketing channels allow you to drive digital and physical traffic to your financial institution. However, if you don’t welcome those consumers with excellent digital and in-branch experiences, you will see poor conversion rates on the metric that matters most: account opening.
Your marketing is only as effective as your onboarding experience. And that means that your marketing team needs to partner across the organization to make sure that every qualified consumer has a clear, easy path to becoming an account holder.
Justifying More Marketing Budget
You can drive all the traffic you want and offer a great product, but the secret to justifying more marketing budget is to be tracking your various campaigns throughout the consumer journey. You need to know how well each step is converting so that you can troubleshoot areas with low conversion rates and can clearly illustrate how effective your marketing efforts are on a granular level and as a whole.
For example, if you could show that $200,000 in marketing spend is delivering 700 new accounts, you would have a strong case to make for increasing your budget to grow in a predictable, sustainable way.
Using a marketing strategy that combines proven channels and a fully online path to account opening, you can precisely target the consumers you want and clearly demonstrate how your marketing efforts are contributing to the larger goals of the institution. By combining measurable results and accountability, you create a foundation of trust for your executive team and board of directors to rely on when you push for additional marketing budget.