A series of rate hikes has made deposit growth strategies top of mind for banks this year.
Bankers are under tremendous pressure to find ways to attract and keep deposits on their balance sheet. One way for them to do so is by strengthening existing digital banking platforms to shift away from personal financial management tools, or PFMs, to personalized financial guidance, or PFG.
Banks have relied heavily on PFM tools to increase engagement. The problem is that PFMs lead to disengagement, hurting a bank’s ability to attract and retain deposits. That’s because traditional PFMs focus on consumers’ past spending behavior but don’t actually tell them how to improve their financial situation. This can lead to users feeling unmotivated to continue using the app without positive encouragement. Integrating PFMs into a digital banking platform can cost banks thousands of dollars, and low engagement means little return.
Unlike PFMs, PFG can offer guidance on what customers can or should do with their money to meet specific goals, like paying off debt, starting an emergency fund or building wealth. The bank can pinpoint exactly where a customer is on that journey and coach them on improving their financial fitness by providing products and services that meet their specific needs at precisely the right moment. It’s like giving the customers their own dedicated financial coach in their pocket.
This was exactly the case for Durant, Oklahoma-based First United Bank & Trust Co. The $14.5 billion bank sought a new way to help its 330,000 customers improve their financial health through its digital banking channel, which would also allow the bank to pursue revenue generation for the first time through this avenue.
First United began implementing PFG technology in 2022 to provide customers with recommendations designed to improve their financial health, like opening an emergency savings account. These recommendations are personalized to customers’ unique financial situations by factoring in details like cash flow, expenses and debt-to-income ratio.
This gives the bank a way to gamify financial wellness, just like a fitness app. Demonstrating positive behaviors, like saving money in a new emergency account or paying down a loan, allows customers to accrue points and badges that work towards personal financial wellness goals and awards. First United customers now have a fun and interactive way to improve their financial health, while generating new revenue for the bank.
Launching to its entire mobile user base in November 2022, First United saw a 46% adoption rate of its PFG technology among mobile users in the first 120 days, almost doubling the industry average. Within just 30 days, the bank digitally increased savings account opportunities by 20 times compared to an average physical banking location. In the first 24 hours, the bank saw 120 new savings account opportunities; by the end of the first week, those opportunities rose to a total of 257. That number climbed to 400 after 30 days and 1,299 after 90 days. In the first 120 days, First United saw an 11% conversion rate of users who were prompted to open accounts; 86% of those accounts were funded.
Ba“A typical First United location normally sees 20 savings account openings per month. Ninety-one percent of all new accounts at First United are still opened at a location. So getting 120 in the online channel (on the first day) is a monster improvement in the numbers,” said Dan White, First United’s director of customer and employee experience program office.
Creating these new accounts affects the bottom and top lines of the bank. Using PFG to drive savings account openings through its digital channel helped increase First United’s share of wallet with customers while decreasing acquisition costs for those accounts by 86% within the first week.
PFG also produces a more rewarding experience for customers, who are more likely to spend time on the banking app. First United has boasted a sustained 13% user engagement rate since its launch —more than triple compared to industry competitors.
First United’s experience shows how banks can deliver a truly personalized financial wellness experience for customers while identifying an extremely successful deposit strategy.
Directly embedding these capabilities into First United’s existing digital banking channel meant customers had direct access to a tool that had the same look and feel they already know and trust — leading to fast adoption. In just a few months, the bank increased revenue and facilitated additional customer loyalty, all while helping the bank better serve its community.