Happy New Year, GonzoBankers! With the holidays in the rear-view mirror it’s time to focus on those New Year’s resolutions. So what’s it going to be in 2009? Lose weight? Check. Stop smoking? Yep. Adopt a Labradoodle? Great. Get a grip on finances and save some money? Sweet.
Financial institution customers and prospects have probably made the same set of resolutions. Guess which one of those you may be in a unique position to help customers with as a financial institution? No, I have not been able to confirm that Citigroup had an animal shelter subsidiary at one point in its financial supermarket, so that leaves managing finances and saving money as something with which institutions can assist.
Given the condition of the economy and a demonstrated change in consumer behavior toward saving*, the time is right to ensure Internet banking channels are up to the challenge of helping customers save. The good news is that many institutions may already have several one-off capabilities that simply need to be packaged and promoted as a complete savings solution. What’s wrong with helping customers and gathering more than your share of the increased savings that’s out there? Cha-ching!
NINE SAVINGS PROMOTION IDEAS FOR ’09
Let’s start with some features that most institutions have today.
Recurring transfers are a standard feature on Internet banking Web sites these days. Are recurring transfers being promoted as a means to save regularly and are they simple to set up? How is the process of failed recurring transfers working? Do customers clearly understand why the transfer failed so that they aren’t frustrated? Many credit unions also offer payroll distribution, which can automatically conduct a transfer to savings each time a payroll deposit is received.
Alerts can help customers reduce their chances of incurring overdraft fees that can impact their ability to save. What’s being done to encourage utilization of the alert features offered on your Web site? Low balance and NSF alerts are a pretty standard feature on today’s Web sites. Do customers understand how to set up an alert and the options available for receiving alerts (email, text message, etc.)?
Financial Advisor Consultation
It’s a rare Internet banking platform that doesn’t have some real estate for banner advertising. How can the banner capabilities be utilized to promote consultations with financial advisors, if offered? Of course, rotating some banners calling attention to all of these nifty features we’re discussing today or savings/money market account offerings is an alternative.
As financial institutions were upgrading their marketing Web sites years ago, many of them added a slew of financial calculators. Over the years, the calculators have been buried further and further in the Web sites. Maybe it’s time to spiff up and promote at least the savings-related ones and help customers understand the positive impact of regularly setting aside some money. A few institutions might even find the calculators they have today aren’t working because they haven’t applied recent updates!
Let’s move up the food chain to functionality that may not exist or be as prevalent but that institutions could add to their arsenal in a reasonable time frame through purchasing a solution or developing in-house.
Online Account Opening and Funding
If consumers are going to save, they need a place to put their savings. A fancy new deposit account is a likely candidate for building that nest-egg, so make it easy to open an account on the Web vs. making folks schlep to a branch. Packaged solutions have been on the market for quite some time and are becoming easier to implement. If already available, is that fancy account-open-and-fund functionality being promoted on both the marketing site and the secure Internet banking site?
Positive Reinforcement via Bonus
Perhaps a financial incentive will provide the motivation customers need to keep squirreling money away on a regular basis. Why not provide a one-time bonus for opening a new savings/money market account and completing a certain number of automatic transfers successfully? Or maybe a one-time bonus for reaching a certain savings goal by utilizing regular transfers? Contests with an entry for each recurring transfer to savings? Maybe a promotion surrounding tax refund deposits?
Personal Financial Management Tools
Terence Roche pointed out in December that many of the major Internet banking vendors are rolling out personal financial management (PFM) modules, allowing customers to set a budget, track spending, and generate reports and charts of spending habits and budget progress. There’s an old saying, “If you can’t track it, you can’t manage it.” PFM enables consumers to get a handle on their spending, ideally resulting in greater opportunities to set aside some money as savings.
I’d love to see a forward-thinking vendor or institution take things a step further with social and communication-related enhancements.
Positive Reinforcement via Progress Communication
For other savers, the journey might just be the reward. Why not make it fun? Are there ways to support goal-setting by allowing your customers to post pictures of things they might be saving for on their Internet banking pages? How about a graph of progress toward the savings goal and/or regular email communication (opt-in, please) on progress? Maybe a special Web site greeting or sound effect when a goal is reached?
A little help from friends never hurt, so think about ways savings goals can be publicly shared if the customer desires. I’m thinking embeddable widgets (a Facebook application, for example) that might show customers and their online friends progress toward a goal. Take it a step further a la SmartyPig or Freshman Fund and find a way to let those friends and family contribute toward customers’ savings goals.
WHAT’S IN IT FOR FINANCIAL INSTITUTIONS?
How can institutions justify the return on these types of initiatives? The obvious answer here is deposit growth that can come in the form of new deposits from non-customers, increased wallet share from current customers, and reduced attrition. This is no Underpants Gnomes scheme: Net balance increase times margin less your costs to implement the suggestions above = profit! (Cost accountants, step slowly away from the keyboard.)
Oh, and by the way, it’s great for your customers, too, so dust off those features you already have, implement some new ones, and tie them up with a nice bow in a shiny new package. Don’t be a stranger – let me know how it works for you.
* In fact, a Jan. 13 Washington Post article quotes Bureau of Labor Statistics data indicating savings as a percentage of disposable income has increased from near-zero for the last few years to 2.8% as of last November.
Bankers, it’s time to get creative in your quest for deposit growth.
You have the basic tools in place, so why not blow the dust off, add a new twist or come at it from a whole new direction?
Cornerstone Advisors can work with you to gain strategic advantage with the technologies you have in place — and we can help you prioritize minor tweaks that could give you a differentiating edge.