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Prime Your Bank for Primary Retail Deposit Customers

Don’t dismiss the value of primary retail customers even if your institution is awash in deposits. Chances are that these customers will become even more valuable soon – and it will be more expensive to find them.

But the traditional ways to identify which customers are primary, such as assessing direct deposit behavior, just aren’t as reliable as they used to be. And they also don’t help you determine how to improve customer relationships. These dynamics will create a challenge for banks, particularly when rates start to rise.

Curinos believes that banks can use a combination of traditional metrics and advanced segmentation analytics to better gauge primacy and propel customer growth. By adopting these analytics now, they will be better positioned in the future.


There’s no doubt that primary customers are the lifeblood of banks. They keep deposit coffers full, provide more fee revenue than other customers, stick around for years and don’t haggle over rate. (See Figure 1.)

Figure 1: Primary customers are the lifeblood of a bank for many reasons

Greater Fee Revenue


Lower Rate Sensitivity

Greater Stickiness

Source: Curinos research and analysis

Those who invest in primary customer growth now may find that primary customers are “on sale.”

In the current rate environment, however, that benefit has diminished. The rate advantage primary customers provide is compressed, and banks can’t put all of their excess deposits to work due to anemic loan growth. As a result, Curinos estimates that the traditional benefits of primacy have temporarily diminished by about half – and even more at some banks.

Indeed, more than half of the participants in a recent Curinos webinar hosted by the Consumer Bankers Association said their institutions were investing the same amount or less on acquiring and growing primary deposits than they did when rates were higher.

Those who invest in primary customer growth now may find that primary customers are “on sale.” As these banks continue to build a stable of primary customers and sticky deposits, they will likely find it easier to lag upcoming Fed moves while retaining balances.

And those who didn’t invest in primary customer growth may find themselves needing to pay more to get customers and deposits later.


Banks can start attracting and retaining primary customers today through a combination of technology, incentives and old-fashioned sales strategies aimed at the products and services that mean the most. That means pumping money into digital capabilities that make the funding process easier and create a better customer journey.

Some banks are already amping up cash offers to reel in new customers. While most regional banks typically offer a few hundred dollars for a new checking account, some offers are as high as $1,500 for a new mass-affluent checking account.

But while new customers may seem great at the outset, how do you know which ones are really going to stick with you versus those who will bolt when a better offer from another bank hits their inbox?


Banks have traditionally taken a binary approach to assessing primacy that measures direct deposits and a certain number of qualifying transactions. Nearly 60% of the recent webinar participants said their institutions use the method.

The problem is this approach doesn’t account for the entire customer relationship, including attributes such as usage and duration of balances, customer depth and share of wallet. It also doesn’t consider underlying customer behaviors around shopping and price sensitivity. The binary approach also provides bankers with little information around treatment strategies to improve customer relationships, and ultimately lifetime value.

Take, for example, a customer who receives a direct deposit every month, but who spends the funds via a combination of an off-us credit card and Venmo, transferring any excess monthly savings to a high-rate online bank. While this customer may be considered “primary” under the traditional binary measurement approach, he or she isn’t providing significant value to the bank.

Instead, the bank would benefit from combining traditional measurement techniques with a more sophisticated approach that segments customers to determine the best treatment strategies aimed at increasing primacy.

Curinos has identified seven such segments (and corresponding actions) – taking into consideration a multitude of customer behaviors – that can help drive primary customer growth. (See Figure 2.)

Figure 2: Customer primacy segments and potential treatment strategies

Source: Curinos research and analysis

For example, a segment that Curinos identifies as “Long-Term Relationship Builders” are highly-engaged customers who also appear to have wallet elsewhere. They may be responsive to cross-sell offers and, since they haven’t exhibited rate sensitivity in the past, a simple nudge (and not a high interest rate) may be all they need to move balances over.

One advantage to the traditional, binary approach to measuring customer primacy is that metrics are prevalent in the industry, meaning that ample benchmarks are available. Increasingly, more advanced segmentation approaches can be benchmarked to industry peers as well.

This enables banks to understand where to focus efforts to improve future primary customer growth: is the bank lagging peers in acquiring new primary customers, cross-selling existing customers or are primary customers becoming disengaged?

Curinos estimates that better customer primacy measurement approaches can drive one percentage point of greater primary customer growth annually. Even acquiring two to three additional primary customers per branch per year will go a long way to increasing long-term value, especially as we return to a more normal deposit and rate environment.

And there’s plenty of room to grow: Curinos estimates that only 50-60% of deposit customers at the typical regional bank are fully engaged. Meanwhile, only about a quarter of webinar participants estimated that more 50% of their customers have a full deposit relationship with the bank.

There’s only one direction for interest rates to from here: up. Banks that focus on capturing primary customers today will find it less expensive to do so now than in a higher-rate environment. And they will continue to reap the benefits long into the future.

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