An unpredictable stock market and rising interest rates have led to a record drop in deposits at small financial institutions. This general sense of consumer apprehension led The Wall Street Journal to recently declare, “The Era of Easy Deposits is Over for Main Street Banks.”
We are hearing the same thing from our clients: that bringing in sticky, long-term checking relationships and increasing deposits to help fund loans is a top priority — and a major challenge. One financial institution shared that they only closed 13% of the auto loan applications they received in January due to the additional cost of borrowing funds. Their rates were no longer competitive, forcing consumers to go elsewhere.
If capturing a larger share of deposit money to help boost loan capabilities is also top of mind for your financial institution, now is a good time to evaluate your checking account acquisition goals and determine the best approach to exceeding them.
Consumers are ready to make the change
A 2023 study revealed that 79% of consumers are likely to switch banks if they find one that better meets their priorities. This is a 27% leap from 2020. In terms of demographics, Millennials and Gen Z show even more willingness to switch, at 85% and 82%, respectively.