To grow deposits, digital isn’t enough: Forrester

Despite the vast improvements banks have made to online account opening processes, most consumers are still turning to branches to open new accounts, a recent Forrester Research study observed. According to a Forrester Research study released last month, 71% of U.S. adults who use the internet regularly still went into a branch to open a checking account. That number dropped to 64% for savings accounts and 53% for certificates of deposit. According to Alyson Clarke, principal analyst at Forrester Research, customers still use branches to open accounts because of the added safety net of human help. Regardless of how comfortable a customer is with mobile banking, they don't open accounts often enough to familiarize themselves with every aspect of the process, she noted. [caption id="attachment_183517" align="alignright" width="463"] Source: Forrester Research[/caption] "You can learn mobile banking because it's a learned UX," Clarke said. "Even if you go through your digital account opening [process] today, the next time you open an account, it's probably going to be completely different." The report, entitled “Eight Ways to Grow Deposits,” pulled from two surveys. The first, which was fielded from October 2018 to January 2019, surveyed almost 48,000 people in the U.S. between the ages of 18 and 88, as well as more than 4,600 people from Canada in the same age range. The second, which was carried out from December 2017 to February 2018, surveyed almost 4,700 Americans and Canadians ages 18 to 88. Responses were weighted by age, gender, income, region and rate of broadband adoption. The study looked at seven other ways banks can grow their deposit base: online search and comparison sites; a clear value proposition; an easy account-opening experience; quick movement of deposits into new accounts; customer loyalty, helping customers save; and analytics for targeted marketing. A focus on loyalty through referral channels Forrester noted that referral-based rewards are effective ways to grow customer loyalty and drive deposit growth. The report pointed out that the cost of paying referral-based rewards is often less than the cost of traditional acquisition methods. Forrester also singled out Monzo , the digital-only banking brand from U.K., as a success story. According to Monzo’s 2018 annual report, the average Monzo user has 15 friends using the app, and 80% of new customers come through word-of-mouth referrals. According to Clarke, Monzo involves customers heavily in its branding, as the name and the color of the card are the results of customer feedback, and the co-creation feel creates passionate customers who are willing to recommend the product to friends. The study also found 33% of U.S. adults who opened a new checking account in the past three years did so after hearing about the provider from a family member or a friend. For savings accounts, the number fell to 27%. For U.S. adults who opened a savings account during the past three years, 57% did so with a bank they already worked with in some capacity. According to Forrester, search engines and bank comparison sites can impact deposit growth. The study found 17% of U.S. adults use search engines when researching banks. Twenty-one percent of adults in the U.K. use comparison sites such as Bankrate to compare savings accounts, while only 10% of U.S. adults do the same for savings accounts. [caption id="attachment_183518" align="alignright" width="445"] Source: Forrester Research[/caption] The role of automation Automation, particularly personal-finance tools, can be effective in increasing deposits. According to Forrester, Bank of America and Lloyds Bank helped customers round up purchases and put the extra money into savings accounts. Forrester also looked at Royal Bank of Canada ’s NOMI Find and Save, which the study stated has saved C$83 million (more than $63 million), an average of C$180 ($138) per month for active users. In addition, the study drew attention to Varo Money ’s efforts to drive money into accounts quickly. Varo sends customers a prefilled voided check with its debit cards, allowing customers to easily set up direct deposits into the account. Clarke stressed the need for a multifaceted approach to win more deposits. "[Banks] think they have to put all their energies into digital, and that might not be the best investment for growing deposits," she said. "I think people underestimate the power of the branch and the frontline employees." Bank Innovation Ignite, which will take place on March 2-3 in Seattle, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation .

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