This piece is excerpted from a presentation given by Brandon Larson, Curinos’ Chief Advisory Officer, on May 12 at the Curinos-hosted Insight to Impact Growth Summit in Nashville.
Promotional rate pricing adds to balances, but will the balances persist? The lens for adding deposits to the books can’t be solely through acquisition cost and near-term volume but on long-term customer value that considers deepening and retention. And that requires adding a customer-centered approach to the foundation set by a product-centric approach.
Rather than treating every customer as one, customer-centric evaluates relationship tenure, account activity, deposit inflows, existing balances along with propensity to respond. It allows FIs to determine whether a customer should receive an offer at all and, if so, which offer is most likely to deepen the relationship and minimize the risk of attrition. This schematic illustrates the point:
Source: Curinos Analysis
To a long-time customer with little activity and a low rate, not making an offer is preferable to awakening the sleeping dog. A recent addition to a checking account could signal the desire, latent or otherwise, to earn interest. In this case an offer is appropriate to deepen the relationship. An offer is also appropriate to a customer with high income-producing assets but low on-us balances. The right proposition at the right time could add to current balances and even clear the path to primacy.
The message is clear: Pricing should remain product-led at its foundation but should also apply customer-level intelligence to maximize relationship value through deepening and deposit retention.
