For credits unions looking to attract and retain member deposits in today’s high-rate environment, much has changed since this stage of the last rate cycle. Digital players are pushing out the upper limits of deposit rates, and the number of depositors indifferent to rate moves has shrunk considerably. As a result, the just-in-time strategies that prevailed during the extended period of low rates have been rendered obsolete.
What CUs need now are data and analytics to forge a better understanding of competitors, members and prospects into deposit strategies suited for today’s higher-rate challenges.
What’s At Stake
Rates are higher than they’ve been at any time in the past 15 years. Without the right data-guided insights, CUs can expose themselves to a range of deposit-pricing pitfalls, including:
- Reacting too quickly to perceived actions of competitors
- Overlooking differences in acquisition behavior by products, segments and regions
- Failing to reinforce the right member-facing behaviors and responses on the front lines
In addition, the high volume of certificate renewals continues unabated. Many certificate holders are renewing for the first time, making their rollovers highly susceptible to rate scrutiny (Figure 1). The challenge becomes how best to retain the balances without giving away the house on rate.
Figure 1: First-Renewal Certificate Rate at Maturity | 12 – 17M | Jan ‘24 – Dec ’24 | FIs with Branches*
What’s Possible
An up-to-date, data-driven strategy can protect credit unions from raising rates unnecessarily. A more targeted approach could include:
- Balance-augmentation campaigns. Through insights gleaned about members, CUs can focus on those most likely to respond to new-money offers.
- Selective new-money promotions. Where judiciously executed, promotional new-money rates in those areas where market share is relatively low can potentially gather new deposits while, at the same time, maintaining the prevailing savings rate in denser markets.
- Certificate rollover strategies. One way to fend off high-rate competitors is to set auto-renewal rates on the lower side (though not so low that renewing members feel taken advantage of) while remaining more competitive in at least one term product for acquisition. This would allow a provider to harvest margin from auto-renewals while responding to the needs of rate shoppers.
Any of these actions need to be considered in the context of a credit union’s mission to best serve its member base. But within these bounds, Curinos believes there’s ample opportunity for CUs to selectively grow new deposits and minimize outflows via strategies and tactics based on near-real-time data on member behavior and competitive activity.
