Five strategies for predictable core deposit growth

In today’s financial landscape, core deposits are the lifeblood of your credit union.

Interest rates seem to have stabilized, but the combination of the rise of interest rates and inflationary pressures in the last few years has returned us to a place where the best way to grow your credit union is by growing core deposits.

While you may have embraced that reality in theory, many credit union leadership teams struggle to find and implement practical strategies that will help you compete and win in your market.

Strategy 1: Focus on advisory services over transactional

Focus on building relationships and providing thoughtful financial advice to members. Big bank conglomerates may beat you on digital tools, but there’s no reason they should beat you on delivering advisory services that increase your members’ financial wellness.

To do this well, you need to build trust, provide excellent customer service, and give members solutions to the practical financial problems they face.

In some ways, “advisory over transactional” could be the category that all of the strategies below fall underneath, but it’s important enough that it needs to be at the top of the list.

Strategy 2: Target Gen Z

Gen Z was born into a world with digital advancement in hyper-speed, but also a world of financial turbulence. The result is a generation that may seem like something of a paradox—digital natives who are more financially conservative.

By providing financial education and enablement, you have the chance to bring this generation into their fold as loyal members and low-cost depositors.

Consider offering educational classes for the community about topics like living on a budget, getting your first mortgage, and understanding different saving and investing options. You’ll build trust and give members the tools they need to thrive financially.

Strategy 3: Reinvent branches

Have you noticed how often restaurants update and remodel their locations? Usually about every 5-7 years. And it’s not a waste of an investment, either. Studies show that remodeled restaurant locations usually see sales increases between 15-40%.

If updating the space where people go for a chicken sandwich makes that much of a difference, how do you think people view a branch that hasn’t been updated in 10+ years?

Make the strategic investment to update your spaces—not just with a coat of fresh paint and new carpet (although you probably need those as well). Reimagine your space to facilitate a more advisory approach instead of putting your staff behind a huge teller wall.

You’ll be surprised at how a refreshed and reinvented space attracts new members.

Strategy 4: Highlight local connections

Here’s another area where credit unions can run circles around the big bank conglomerates. Make strategic investments in your community and don’t be shy about spreading the word about the good work you’re doing.

Many people don’t understand that credit unions are fundamentally different from banks in that they don’t exist to benefit a group of unknown shareholders. As nonprofits, credit unions should invest time, energy, and resources to help people understand how they make communities better by keeping revenues in the community.

Strategy 5: Gather and share member testimonials

Putting systems in place to consistently gather and share member testimonials is one of the most important things you can do from a marketing perspective.

People are bombarded everyday with literally thousands of marketing messages. Online reviews play a shocking role in the decisions people make every day about which products and services they choose.

In fact, partially due to the overwhelming amount of marketing messages consumers receive, they overwhelmingly trust what others say about you over what you say about you.

You can regularly request that satisfied members post a Google review of your credit union (there are automated services that will make this fairly easy that are surprisingly affordable).

And, you should consistently ask members for their feedback so you can both improve the services you offer and share their positive testimonials through all of your communication channels.

Far too many credit union executives drastically underestimate the power of member reviews and testimonials. Many of your members will be happy to give a review or testimonial—they just need to be asked.

More intense competition for core deposits is on the horizon. Are you ready?

It may go without saying, but we feel the need to say it anyway. Greater competition for core deposits is coming soon—in fact, it’s already here!

If you’re not feeling a sense of urgency to find and implement effective strategies to grow your core deposits in a predictable way in the future, you haven’t been paying attention the last few years.

Now is the time to take bold action. Even if you can’t do all of the strategies we’ve articulated here, choose one or two and get going now. Then, over time, implement as many as you can. That’s a plan for predictable long-term growth.