How to Increase Deposits in a Rural Area: Strategies that Work
Traditionally, communities in rural areas relied pretty heavily on smaller banks to provide them...
Is your financial institution struggling to increase deposits? You’re not alone. Deposits at most financial institutions have plummeted recently, falling nearly $126 billion in the last two years.
Why aren't more people making deposits now? One reason is that more people have shifted their money to investments with higher yields since the Fed began raising interest rates in 2022.
And after the infamous bank failures this year, people are nervous about keeping their money in traditional financial institutions. There are now more places than ever for people to put their money. For example, online payment systems like Venmo and Amazon Pay have proliferated.
Given these realities, how can you increase your deposits? You need to give potential customers good reasons to choose your bank for deposits.
Here are five actionable ways you can make sure your financial institution is the best choice for deposits:
Continue reading for details on these ideas.
To begin with, research is key because it will show you what's most important to your customers. Your team should assemble profiles of existing customers who make substantial or frequent deposits. What demographic patterns do you see?
For example, banks whose deposits come mostly from younger people need to offer a convenient and robust digital banking experience. But banks in a rural area probably need to invest more in maintaining an in-house experience for those older people who still prefer to do their banking face to face.
Equipped with information about your depositors, you can then target your main deposit groups through social media ads, search engine ads, email campaigns, and other effective forms of marketing.
After you’ve made sure your deposit offerings meet the needs of your typical customers, you’ll also want to find ways to reach other customer segments, such as small business owners or high-net-worth individuals. By tailoring your products and services to meet the unique needs of these groups, you can attract customers who are looking for specialized banking solutions.
For example, you can appeal to small businesses by offering remote deposit and ancillary services like partnering with a third party for credit cards.
You can also offer banking services in geographic areas where there is little competition or where the population is growing to attract new customers who may not have considered your bank previously.
It’s probably no surprise that raising deposit rates is the most popular way within the industry to get more deposits. This is especially true now, while the Fed is raising rates.
Of course, not every FI can raise its deposit rate enough to compete with the higher-yield investments that are wooing depositors away now. However, if you can raise your rates at all, do so. You can then advertise that higher rate heavily.
Besides raising rates, consider the following ideas to entice new customers and reward existing customers:
Do you support local businesses and causes? If you don't, you might want to start doing so. And, if you do, make sure prospective local customers know about it.
Here are some suggestions for how to support your community:
Many civic-minded people would be more willing to deposit their money in an institution that helps to build up the community. And if you support local business, regional business leaders might recommend deposits in your FI to their employees.
When you’ve invested time and money in supporting local interests, make sure your ROI reflects that by using smart digital and traditional marketing methods:
It's vital to provide your FI with cutting-edge and truly dependable software. That way, you can be sure that making online deposits will always be easy for your customers.
Using the best software provides many advantages—too many to list here. Two advantages that can make a difference in attracting depositors are enhanced security and digital banking.
Enhanced security protection is increasingly important for depositors. The recent bank failures have weakened the trust in banks, so you need to make sure your depositors know their money is safe with you. Your software solution should provide state-of-the-art security that will help you compete for deposits and meet regulatory requirements.
Ever since the COVID lockdowns, people have increasingly expected digital banking options, from depositing checks with a snapshot to contactless card payments. Digital banking saves time for customers and is more efficient for your bank, too. When upgrading your digital banking offerings, be sure to include the following considerations:
In the end, when you have excellent service, smart strategies, and first-class software, major increases in your deposits may not be far behind.