Most Banks Win the Account But Lose the Customer. Here’s How to Fix That
By Nicole Volpe, Contributor at The Financial Brand
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Most community banks and credit unions know they should prioritize accountholder long-term value. Doing so benefits both the institution and its customers or members, driving profitable growth for the former and providing stable, relevant financial services to the latter. But achieving and maintaining such relationships is easier said than done.
Pushed and pulled by the rate cycle and thrown off balance by fintech and online-only competitors, financial institutions can lose focus. They chase “hot money” when rates are rising, building acquisition-centric strategies that too often leave engagement out of the equation. They go quiet just as the need for high-utility fee-generating services like overdraft protection rises.
For institutions looking to balance growth and profitability, the current transitional rate environment is an especially challenging one. The period of rapid repricing is mostly in the rear-view mirror, and the margin protection that came from assets repricing more slowly than liabilities is shrinking as deposit costs catch up and loan yields drift down. Non-interest income is once again a priority, but most institutions haven’t yet built the strategies to grow it.
Meanwhile, accountholders remain willing to move money for yield or convenience: 20% of retail bank customers have moved money away from their primary institution within the past three months, up from 17% last year, according to a 2026 JD Power survey. This is backed up by the survey’s satisfaction data: while overall customer satisfaction with retail banks leveled off in the first quarter of 2026, sharp declines in late 2025 indicate growing customer discontent across all engagement channels.
Institutions that invested heavily in acquiring new accounts at scale may see balances begin to decline within a year, as engagement habits never fully take hold and response rates to new product offers start low and stay low. Andy Fogle, VP National Sales for ADVANTAGE describes this phenomenon as “winning the account but losing the relationship.” Here’s a playbook to avoid falling into this trap.
1: Face the Truth About Incentives
To keep the problem of rate- and incentive-chasing in perspective, start with a mindset shift: A new account that comes in because of a $350 bonus or a top-of-market rate is not a relationship. It’s a transaction.
“An accountholder who’s already shown they’re willing to move accounts for a financial incentive is likely willing to do so again for a similar return,” said Fogle, whose company provides software and growth consulting services to community banks and credit unions. “Once that person hits, say, the six-month threshold to earn their bonus, they’re going to get a cash bonus offer from a competitor and ultimately churn or abandon.”
As parties to this “transaction,” financial institutions must focus on maximizing their side of the bargain. This starts with onboarding processes that help new accountholders put down roots early in the relationship. And it continues soon thereafter as the institution leads new customers or members to sign up for services that become embedded in their day-to-day financial lives and often generate fee income.
2: Ensure Onboarding is Structured and Purposeful
According to Cornerstone Advisors’ most recent What’s Going on In Banking survey, deposit gathering and new customer or member growth are financial institutions’ top two concerns — with 52% of bankers ranking deposit gathering first and 62% of credit union execs ranking new member growth first. Despite this focus, many institutions aren’t achieving these goals, largely because they lack a structured approach to post-acquisition activation and engagement.
A structured onboarding process can bridge this gap, by driving consistent account usage, reinforcing value, and guiding accountholders toward next steps based on their behavior. “Too many institutions have weak or nonexistent onboarding,” Fogle said. “Acquisition only creates value when it leads to activation.”
For smaller financial institutions concerned about the cost of implementation and the limits of their tech acumen, it’s important not to let the perfect be the enemy of the good. Leading new accountholders to take even one “next step” that advances the relationship — provided it’s consistently applied — can make a quantum difference.
Ideally, such high-retention options are integrated within the account opening workflow. So account funding follows immediately on the heels of signup confirmation, followed by debit card activation, and from there to deeper engagement options. Some institutions may also opt to make debit activation or recurring direct-deposit setup a primary call to action of the welcome message, typically sent via email or text.
For others, the critical first step may be entirely internal: loading the accountholder into a CRM, assigning them a persona or profile, and then using those insights to structure the next steps and in the process positioning the institution to move more directly from onboarding to engagement.
3: Make the First 90 Days a Pathway to Primacy
Achieving primacy — becoming the account a customer or member uses first and trusts most — plays a prominent role in the organic growth strategies of most banks and credit unions. Primary accountholders have higher balances, use more products, and deliver greater lifetime value, driving non-interest income and long-term profitability.
Fogle advises financial institutions to make primacy the end goal of every accountholder’s first 90 days. To achieve this, he proposes a process with three distinct phases: In Phase 1 (the onboarding phase – days 0-30), the goal is to ensure the new account is funded and its associated debit-payment functionality activated. By the end of Phase 2 (days 31-60), direct deposit and alerts should be in place. And by the end of Phase 3 (days 61-90), the accountholder should have initiated bill pay services and set up recurring payments.
That said, how institutions define primacy varies. Some banks declare primacy when a customer routes payroll direct deposit to their account; others use a simple product count threshold. In business banking, the deciding factor may be hosting a client’s payments or cash management functions. But the main takeaway is to start tracking progress toward primacy immediately after account opening, with the goal of achieving it by the end of 90 days.
4: Replace Generic Campaigns with Targeted Ones
Large financial institutions, digital-only banks, and fintechs have invested aggressively in data infrastructure optimized to identify, reach, and convert the customers most likely to evolve into long-term, high-value relationships. Fintechs in particular often do this through narrowcasting, building habituated financial relationships around specific needs or use cases. The ability to profile and target is one of the primary reasons such players are able to take share from smaller ones.
In contrast, many smaller financial institutions still take a broad, undifferentiated approach to acquisition. Fogle uses the analogy of a roadside billboard: “The assumption is that whoever has the most billboards wins, but that hasn’t been true for a while now.” One-size-fits-all engagement and upselling campaigns — whether they focus on credit cards, auto loans, overdraft protection, or HELOCs — will underperform those that aim to predict interest and personalize offers appropriately.
In fact, offers that miss the mark can even drive customers to disengage. For example, a customer with overdraft protection who receives a message offering the same service, may be less likely to read future emails because she has been conditioned to assume they may not be relevant.
Community banks and credit unions must lean into their distinctive advantages: the credibility of their brands with long-time customers and members, their local market knowledge, and their storehouses of transaction history. The idea is to compete where you’re already strong. Identify the segments where your institution has its deepest relationships and its best retention numbers, and build an acquisition strategy around what those accountholders have in common. Which channels did your longest-tenured customers come through? What was their entry product? How quickly did they activate core banking behaviors after opening?
5: Communicate, Communicate, Communicate
One area where many institutions fall short is in providing clear and accessible communication about products, services, terms, and benefits — from direct deposit and activity alerts to overdraft protection and debit rewards.Disclosing overdraft rules at account opening or promoting a rewards program in monthly statements does little to help accountholders understand what the service covers, how it works, or what it costs. When such tools and benefits are minimized or poorly explained, customers and members are more likely to overlook them. Instead of using a resource their institution already provides, they may turn to outside alternatives.
A better approach is ongoing communication that helps accountholders learn over time and is tied to account behavior. Institutions should explain services in plain language, reinforce their availability, and reach out when account activity suggests an accountholder may need — or, in fact, benefit from receiving more focused guidance. Effective communication supports compliance, encourages engagement, grows (appropriately priced) fee revenues, and builds trust.
