Furthermore, retaining account holders has become more challenging with the rise of neobanks and fintech companies that often offer more attractive terms and innovative services. According to Alkami’s Chief Marketing Officer, Allison Cerra, “US financial institutions face the most competitive market, particularly for deposits, than in many years… In June of 2023, US online banks defied market gravity by bringing in more deposits than they lost, buoyed by interest rates two to three times higher than traditional financial institutions, including megabanks,” (Digital Sales & Service Maturity Model, 2024). This shift forces traditional financial institutions to continually innovate or risk losing deposits to these agile competitors.

Additionally, navigating the stringent and often evolving regulatory landscape can delay the launch of new products and services, limiting a financial institution’s ability to quickly respond to market demands and consumer needs. These factors combined create a multifaceted environment where financial institutions must strategically balance innovation, customer service, and financial prudence to successfully grow their deposits.

Financial institutions can leverage personalized banking to connect with account holders on a 1:1 level by allowing them to tailor offers and engagements to individual users. By providing a more customized experience, financial institutions can attract and retain their hard-earned banking relationships. Personalized banking helps meet individual needs better and builds stronger relationships, leading to increased loyalty and trust. This shift strengthens their position in the market and can ultimately lead to an increase in deposits through targeted marketing efforts.

Understanding Needs through Data Analytics in Banking

At the core of personalization is data analytics. Financial institutions can analyze account holder data—ranging from transaction patterns and financial behaviors to digital banking interactions— and make it actionable to effectively tailor their offerings and experience. By understanding the unique financial goals and habits of their account holders, financial institutions can create targeted product offers that resonate more effectively, such as a high-yield savings account for users who are regularly contributing to their savings goals.

Enhancing the User Experience with Data-Driven Technology

Technological advancements such as artificial intelligence in banking and machine learning are pivotal in delivering personalized banking experiences. These tools can predict account holder needs and provide timely financial advice or product recommendations. Moreover, features like customized alerts, financial dashboards tailored to individual preferences, and predictive banking services streamline the banking experience, making it more intuitive and user-friendly. For example, financial institutions can provide users with a credit score solution that empowers them with recommendations for the next best action towards improving their credit score.

Building Trust with Security and Privacy

While personalization can significantly enhance user experience and satisfaction, it requires handling vast amounts of personal data. Ensuring layered security measures and transparent privacy policies is crucial in maintaining trust. Consumers need to feel confident that their data is secure and used ethically for them to be comfortable with a personalized approach. This consumer need for data security and privacy is imperative with younger generations, especially Generation Z, who “is more cautious about data sharing than Millennials or Baby Boomers.”

Result-Driven Financial Services Marketing and Retention

Personalized marketing strategies can effectively communicate the right message to the right account holder at the right time. By employing personalized communication channels and messages, financial institutions can improve engagement rates, thereby increasing the likelihood of deposit growth. Additionally, personalization can help in identifying and preemptively addressing potential churn, securing a more stable deposit base.

With rising interest rates, many financial institutions turned to certificate of deposits (CDs) as an effective means of growing deposits. Ideal Credit Union, an Alkami Data & Marketing customer, activated this data-driven marketing strategy to help them reach their new money goals for deposit growth.
 

Delivering Personalized Banking within the Online Banking Platform

The shift towards personalized banking is transforming the way financial institutions interact with their account holders. By combining the power of an industry-leading online banking platform and financial services marketing automation, financial institutions can truly deliver personalized banking experiences that exceed expectations, while also significantly accelerating strategic business goals. In an era where account holders expect more from their banks and credit unions, personalization stands out as a key differentiator that can drive loyalty and profitability.