Financial institutions face new challenges in maintaining primacy, from rising consumer expectations for seamless, personalized experiences to increasing competition from fintech disruptors, neobanks, and big tech firms. Banks and credit unions must find new ways to keep account holders engaged and remain their primary financial hub.
A 2024 survey by The Motley Fool found that 76% of consumers are likely to switch banks if they find one that better fits their needs, highlighting the critical importance of engagement and ease of use in account holder retention.
To stay competitive, financial institutions must go beyond traditional offerings and create smarter, more connected experiences that drive long-term engagement. Here are three key strategies to strengthen primacy and ensure your institution remains at the center of your account holders’ financial lives.
A consumer’s primary deposit account, where they receive their direct deposit, is a top indicator of primary financial institution (PFI) status. Once a consumer directs their paycheck into an account, they are far more likely to use that institution’s products and services regularly. A study by Alkami revealed that digital banking Americans define their primary financial institution as the one “where they do most of their online or mobile banking,” with baby boomers (49%) and younger millennials (ages 28-35 at 47%) citing this as the top reason their provider is significant to them. . However, switching direct deposits is often complicated and time-consuming, requiring account holders to manually update their payroll settings—a process that can take weeks and often discourages them from completing the switch.
Without an immediate direct deposit setup, new accounts risk becoming inactive. To prevent this, financial institutions can leverage digital banking solutions that embed automated direct deposit switching within their online and mobile banking experience. By integrating payroll connectivity tools, account holders can update their direct deposit settings in seconds, without having to log into their employer’s payroll system or manually fill out tedious forms.
Today’s consumers expect their banking app to do more than just show their balance and transaction history. They want personalized insights, automation, and proactive financial guidance to help them manage their money more effectively. If an institution fails to provide these features, account holders will turn to third-party apps, like budgeting tools or subscription trackers, weakening the bank or credit union’s role in their financial life.
Research indicates that a significant number of consumers use non-bank financial applications (apps) to manage different aspects of their finances. A survey by S&P Global Market Intelligence found that one-third of Americans use three or more financial apps, encompassing services like online purchases, digital payments, and mobile banking. This trend underscores the need for banks and credit unions to embed smart financial tools directly into their digital banking experience.
While smart financial tools help account holders manage their money, payment behavior is another key driver of engagement. Active payment product users could be more likely to maintain a deeper relationship with that institution, increasing opportunities for cross-selling and long-term retention.
Beyond deposits, payment activity is a major driver of account engagement. If account holders don’t set up their bank-issued card as their preferred payment method, they’re more likely to transact with competitors. Financial institutions can address this by offering automated payment switching tools that help account holders update their payment credentials across merchants, subscriptions, and digital wallets.
By simplifying this process, banks and credit unions can ensure their card stays top-of-wallet, increasing transaction volume and interchange revenue.
To win and retain primary banking relationships, financial institutions must focus on removing friction and delivering high-value digital experiences that meet account holders where they are. By prioritizing automated deposit switching, embedding personalized financial tools, and simplifying payment updates, banks and credit unions can deepen engagement, drive loyalty, and reinforce their role as the go-to financial hub.
If you’re looking to strengthen primacy at your financial institution and improve the direct deposit experience, Atomic will be at Alkami Co:lab in the Innovation Lab. Stop by to learn more about how our solutions can help your institution drive deeper engagement and strengthen account holder relationships.
