Increased loan demand is creating a need for more deposits in community banks
In the past several months, we’ve come across a large number of community banks that are in need of deposits to keep up with the increased loan demand of their customers. As a result, many community banks are now looking for solutions. One common quick fix solution has been for banks to offer special CD rates. If this is done without the proper strategy in place, be prepared for increased pressure on your margins. Even with a proper strategy there are many pitfalls to this option. Another option, implemented by some community banks, is to place quotas on employees and begin call programs to find those deposits. Each of these quick fix solutions has its own set of problems, such as poor employee morale and disgruntled or pressured customers.
What’s the key to an effective Deposit Acquisition Strategy?
Simple. The Foundation to an effective Deposit Acquisition Strategy is relational. As a community bank, you can’t compete on price or technology with the larger banks, but you can certainly outperform when it comes to relationships. Sadly, based on something as simple as a telephone mystery shop, most community banks miss the mark and do not make a better first impression than the larger banks. With up to 67% of customers being relational, a community bank must create a culture of taking care of this group. The good news… easy to implement this culture and set yourself apart as a relational bank.
The opportunities
- Customer Referrals – If you haven’t received a customer referral recently then you may want to take a look at your service. Chances are your service is not remarkable and is not getting noticed. Everyone says they give great service but few actually do. All employees can participate in this opportunity.
- Rate Inquiry – Every time a customer or prospect inquires about a rate you should offer an additional service. This opportunity will be available to anyone who answers a phone and who works in a customer contact position.
- Checking Inquiry – Offer the correct product after qualifying questions. Too often employees take the role of “order-taker”. This is a mistake. The top banks offer the right product to the right customer at the right time. This can only be done by asking profiling questions. This will also show a level of professionalism and care for the customer that most banks don’t offer. The keys to this opportunity are to know your competition and to be remarkable. This opportunity will typically be used by the new account desk. However, tellers and loan offices can participate as well.
- Check Cashing/Depositing – This is what we call a transactional opportunity. Every time a customer cashes a check from an investment company, another bank or an on-us check, the teller should mention Demand Deposit Account (DDA) products. This is an easy opportunity that can begin immediately with little training. Every teller should take advantage of this opportunity.
- Loan Application – DDA products should always be mentioned during the loan application process. The key word here is “during”, not after. This opportunity can be implemented for new loans as well as renewals. A good rule of thumb is that a loan officer should be able to open a DDA account with 75% of his/her loan applications.
- CD Maturity Dates – Typically a customer’s CD is liquid just 10 days a year. You need to know when that 10-day period begins. Your new account desk has an opportunity to acquire maturity dates of your customers’ CDs held at other banks. All customers with CDs at other banks should be called.
Putting it into action
Each of these steps sounds simple and obvious enough, but in reality, implementing a Deposit Acquisition Strategy takes discipline and action. A training session or an all-day workshop will not work. Here are a few tips to get you started.
- Monitor daily interview and telephone skills and give the proper coaching and feedback on an individual basis.
- Review tracking with each retail employee at least twice a week on an individual basis.
- Hold weekly departmental meetings to deal with team issues and customer questions, recognize heroes, and discuss the successes of past week.
- Hold weekly Deposit Acquisition conference calls/webcasts with the entire retail operation of the bank.
- Monitor the growth of DDA deposits on a weekly basis and share this information with all retail employees.
- Track all questions and objections and deal with them on an individual and group basis.
- Pay incentive and recognize those individuals who are developing relationships with your customers.
Don’t buy into the coming excuses
Not if but when the excuses are given… “It won’t work here”; “We don’t have time”; and one of the all-time best, “I’ll ask for the checking account after the loan closes”, don’t buy it. Press on and know that if you don’t implement an effective Deposit Acquisition Strategy, one of your competitors just might.
Here at SCMG, we’ve helped community banks around the country implement successful Deposit Acquisition Strategies. If your bank is ready to get started but are not quite sure where to begin, give us a call, 800-560-1127. Our team can work with your bank to achieve your goals for deposit acquisitions.
