5 minutes
Personalized savings journeys should be part of your comprehensive deposit strategy.
Financial institutions are aggressively competing to attract deposits and savings accounts. Liquidity risk for credit unions, in particular, has been identified by the National Credit Union Administration as one of the biggest challenges in 2023. To remain competitive in the market, retain deposits and lower this risk, credit unions need to be able to support the financial well-being of their members on an ongoing basis, and proactively, at the right time, in ways that are relevant to their needs.
A recent consumer study about the cost of living showed that 66% of customers want proactive financial insights that will ameliorate their financial stresses, while 42% expressed a strong desire for personalized advice and money-management support from their financial institution.
Over time, checking balances on the go, transferring money swiftly and easily, and paying bills online have become table stakes. Now, customers are increasingly demanding their credit unions provide proactive assistance and guidance with integrated smart, timely solutions within their mobile app and desktop browser.
As such, there’s an opportunity for credit unions to leverage innovation and technological solutions by leading providers to create hyper-personalized savings journeys and experiences that will make their members not want to leave.
Financial institutions that empower their customers to improve their financial lives are the ones who will have the most success with retaining customers, instilling trust, lowering liquidity risk and therefore, being more competitive.
The traditional tactics of promotional rates and bonuses don’t deliver sustainable gains for consumers or credit unions long term. They can deliver a bump in new member acquisition but don’t attract the kinds of relationships that credit unions desire.
Identifying the right solutions to attract and retain deposits, fostering engagement to build loyalty and trust, and delivering personalized savings journeys should all be part of a comprehensive deposit strategy. Targeted insights, balance forecasts, tailored product recommendations, and savings tools (all in real-time, and based on individual cash flow and spending patterns) are just some of the things that will make credit members think twice before switching to a competitor.
To do so, credit unions need to be able to understand their members’ financial behaviors and needs (step 1); provide quick, convenient and personalized support with savings (step 2); and automate this support to save them time and effort (step 3).
Step 1: Predict Deposit Vulnerabilities and Opportunities
Credit unions have enormous volumes of data on their members’ money and transactions. Using AI-powered solutions to harness this, they can offer automated, personalized advice to help people make better savings decisions—positioning themselves as trusted financial advisors.
Rather than a one-size-fits-all approach, credit unions should actively consider a more tailored way to engage with and provide products, informed by customer needs and behaviors in real time. This recognition of members’ needs and behaviors starts with an understanding of their financial situation, the depth of their relationship with the credit union, and the assessment of their regular savings contributions.
This can be done by leveraging advanced data and analytics capabilities and creating a “money map.” The member money map is derived primarily from the transaction account and shows what money is being retained or leaving the institution and the capacity the customer has to save.
Without this personalization, banks miss potential weaknesses or areas that need improvement.
Step 2: Deliver Proactive and Personalized Solutions
By harnessing transaction data to provide personalized, insights and advice, credit unions can build trust with consumers while positively impacting return on investment.
Personalized advice involves delivering forward-looking and proactive insights tailored to what the customer needs to know and act on at a specific moment. This includes cash flow prediction for members, showing them how much they can set aside and how much they can move into savings regularly.
By analyzing the member’s income and spending patterns, credit unions can capture funds before they are likely to leave the institution.
These are the interactions that build customer engagement, which then turns into loyalty and trust. A loyal customer is far more open to taking a credit union’s financial advice. Members who have greater trust in their credit unions are less likely to move their funds to another institution.
Step 3: Make It Effortless
Helping members manage their money includes telling them how much they can move out of checking into savings and also, if the customer feels comfortable, automatically moving the money into a deposit account for them.
Delivering a practical and effortless savings journey that helps customers set up and reach money-saving goals—getting a new home, going on a vacation, paying for a child’s education, etc.—and track their progress toward them moves a lot of the burden from the member to the institution.
It’s not enough to show consumers a chart of their previous income and expenses. Credit unions need to accelerate the adoption of new intelligent tools and technologies to personalize banking and make it effortless for their members, allowing them to have more time for what is important to them in their lives.
Instead of incentive-based offers, credit unions need to deliver proactive advice and insights and show that they have the capability not just to offer competitive products, but that they have tools that will help their members save better.
It’s more challenging than simply raising savings rates or offering incentives. These traditional strategies that used to work in the past can become very expensive and have only transitory effects—members may just stay for incentive and then look for another institution.
By advising their members on how to grow their savings and then doing the legwork for them, credit unions can rest assured that they are doing everything they can to build long-lasting relationships with their members and attract new ones.
Jody Bhagat is president of Americas at Personetics, which offers a data-driven personalized customer engagement platform for financial services.
