Building an effective deposit strategy plan is an integral tool to acquiring new, and retaining existing, deposits. It is more than a mere strategy exercise. The plan should be looked at as a working blueprint for achieving your bank’s goals for deposit mix and funding sources, as set by your asset liability committee (ALCO). Here are the five steps for designing, organizing and implementing a results-oriented plan:
Step One: Assess Your Competitive Market
You can’t grow deposits if you don’t know your competitive environment. Identify those companies that can lure away your existing depositors with similar products. This will likely include credit unions, online banks, and local, regional and national financial institutions. Audit your competitors’ products, marketing tools and resources—how does your bank measure up?
Once you have identified your competitors, take your bank through an exhaustive SWOT analysis, which identifies the strengths and weaknesses of your organization, as well as its opportunities and threats. This analysis will arm you with the information necessary to put strategies in place to win new depositors away from your competitors.
Step Two: Define Your Depositors—Both Existing and Potential
Data is power in both acquiring and retaining depositors. You must understand who these depositors are and what they value. For example, small businesses need remote capture and treasury services, while more and more consumers are looking for convenience through technology and apps.
Step Three: Assess Existing Deposit Products and Formulate New Products
After conducting your competitive analysis and zeroing in on your target market, you should identify weaknesses in your existing deposit products and address those deficiencies. An important part of an effective deposit strategy is to formulate new products to place on the shelf to have as offensive or defensive weapons in changing environments. Having these products diminishes the risk of cannibalizing other deposits—specifically low-cost deposits—within your bank and allows you to pursue new deposits attracted by higher rates.
Step Four: Assign Accountability, Set Measurable Goals and Allocate Appropriate Resources
Your deposit strategy plan is only as good as the talent and resources you’ve put in place to execute it. If you raise deposit rates but don’t market the rates to potential customers, you will gain nothing except an increase in cost and, perhaps, existing deposits. Traditionally, community banks have not had to focus on marketing. Times have changed. To execute an effective deposit acquisition campaign today, it’s imperative that you invest in an experienced, forward-thinking, in-house or contract marketing team with a sustainable budget and measurable goals.
Step Five: Repeat Quarterly
Revisiting this exercise quarterly will keep your team focused and allow management to update and adapt to new opportunities and threats in the marketplace. More importantly, it will ensure your institution will thrive in any environment.
Provided by Detalus
Brian Cox is a Director and Portfolio Manager in the institutional group at Detalus Advisors, a financial services firm that focuses on balance sheet strategy and investment management for financial institutions.