Traditional banks have long dominated the banking landscape, but more consumers are embracing online banks. People are switching to innovative neobanks and other FinTechs for high rates and better rewards while getting essential banking services and value-added assistance, and banks have stepped up their game to compete. Seventy-five percent of banks are investing in developing customer-centric business models.
Challenger banks, also known as neobanks, are growing fast, as well. There were only 100 neobanks globally in 2017; the number rose to 250 in 2021. The online-only banking segment is witnessing a growth run. While neobanks are growing, they are still small compared to traditional banks. Digital banks account for only 0.4% of the world’s banking assets.
Financial institutions have a chance to hold onto their position in the banking sector. What banks and credit unions need are innovative, cost-effective customer acquisition strategies to get and stay ahead. These are the six elements financial institutions should look into before planning their next customer acquisition campaign.
1. Strategic audience selection
This is the age of targeted ads. Financial institutions should choose their target audience strategically for maximum return on investment of their marketing spend. The first thing a bank needs to decide is the campaign goal. The campaign goal will determine the target audience.
An average American is exposed to 4,000 to 10,000 ads in a day. The ads will be seen on various platforms. However, only one-quarter of these ads will be relevant. Banks must choose an appropriate mix of marketing channels to break through the clutter.
For example, if a bank or a credit union is looking to sell home loans, the target audience would be people planning to buy or improve a house. By targeting ads to customers searching home listings or home improvement ideas on social media or Connected TV and sending them direct mail, institutions will experience a higher conversion rate than blanket advertising on television.
2. Informed testing
No single formula fits all when it comes to customer acquisition. Instead, your institution needs to tailor the customer acquisition strategy to offer value to the desired target audience. For example, reduced rates would be valuable to millennials looking to restructure their student loans. But reduced rates would not appeal as much to high-net-worth customers. For them, value-added services or a streamlined closing process holds more value than a lower rate.
Financial institutions should base the value proposition of an acquisition campaign on the results achieved from other campaigns. Shooting in the dark will not help. Instead, they should partner with professional acquisition and retention specialists to design campaigns that produce positive results.
3. Response analysis/modeling
Financial Institutions should compile multiple facets of their current customer base, which they can use to identify prospects with the same attributes.
Acquiring prospects with profiles like your existing clients will help financial institutions better estimate lifetime value and relationship longevity. Using response data specifically banks can optimize offers and benefit from economies of scale.
4. Digital channel engagement
Bank and credit union marketing communication will impact new customer acquisition and retention. We live in the age of integrated marketing communication. Therefore, financial institutions need to use omnichannel communication to deliver a message.
Banks and credit unions can combine their direct mail acquisition campaigns with digital ads and newer avenues like Connected TV to present a unified marketing campaign.
Digital is a vital channel. Any campaign would be incomplete without it.
5. Deliver a personalized account opening experience
Your advertising efforts will start bearing fruit and prospects will show interest in opening a new account or getting a new loan. Now time to convert these prospects into customers. To acquire new customers, financial institutions must deliver a personalized digital account opening experience, offer instant card issuance and engage prospective loan seekers with a clear, pleasant, lending experience.
6. Offer incentives
Your campaign was a success. You have acquired new customers. Now is the time to focus on retaining them. Financial institutions must design product and service offerings to incentivize to achieve primary financial institution status.
Customer satisfaction is vital. If you have a young, value-seeking consumer audience, the opportunity to save money will attract them. But banks must understand the competitive marketplace and provide personalized value-added services or cash incentives to other prospects.
Will they stay, or will they go?
Analyzing a new customer acquisition campaign using these six elements can breathe life into your campaign and boost results. To strengthen your acquisition strategy, read how offering personalized product recommendations to customers during online account opening leads to loyal customers.