Customer Acquisition for Banks and Credit Unions | OptiRate

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Customer Acquisition for Banks and Credit Unions | OptiRate

  1. 1. Survival of the Fittest How Community Banks, Regional Banks and Credit Unions can regainprofitability and asset growth through targeted Customer Acquisition
  2. 2. Community FIs are well liked and respected byconsumersCommunity Banks, Regional Banks and Credit Unionsoutperform their larger competitors based on CustomerTrust, Loyalty, Net Promoter Score, willingness to Refer,among others.Community FIs offer premium ratesCommunity FIs offer superior service and pricing on productsand services. In fact, as many as 10% of the Community FIsoffer deposit rates that are 2x – 8x greater than the nationalaverage rates.Naturally, given these factors, it would be reasonable toexpect that Community FIs would be a driving force in theBanking Industry with significant customer penetration. 2
  3. 3. Community FIs underperform on all factorsBUT… As a group, Community FIs did not participate ingrowth in 2010, as virtually all of the growth accrued tomega-banks in 2010. In fact, Community Banks lost $46billion in deposits in 2010, while Regional Banks grewdeposits by a mere $4 billion. Growth at Credit Unions waslackluster during the past 2 years – with the largest CUs(assets > $1 billion) capturing more than 60% of all growth.Smaller FIs have been unable to compete effectively!And the often mentioned flight from mega-bank toCommunity FIs has been greatly exaggerated. Mega-bankscontrol a disproportionate share of accounts with no evidenceto support a reversal of this trend. Larger Credit Unions (withassets > $1 billion) control approximately 40% of allcustomer accounts, while the smallest FIs (assets <$100million) control just 20% of the customer base. 3
  4. 4. Community FIs face significant challengesThe world has changed, so have your markets your competition your customers your prospects your challenges, and your opportunitiesThe past several years has seen tremendous changes andshits in technology, customer adoption of new channels,shifts in consumer preferences, regulatory changes and everincreasing competitive pressures. These and other factorsare breaking the „Laws of Banking‟, including FIs must have a physical presence in a geography to compete Branches are the hubs of retail banking activity Community FI market segments are protected from mega- bank intrusion 4
  5. 5. Community FIs face significant challengesCompetitive environment is only getting more competitive.The deployment of tools by banks enabling remote bankingand adoption of online services by consumers has foreverchanged the age-old competitive structure. FIs no longerneed a physical presence in a geography to compete.New entrants such as Ally Bank, ING Direct, Amex Bank,Discover Bank, Capital One Bank and others have proved thisbeyond the shadow of the doubt. Regardless of theirbusiness models, consumers are attracted to their messageand have flocked to these institutions.In parallel, the competitive environment in the “traditional”branch centric model is intense. 82% of all deposits areconcentrated in 83 metropolitan areas with 50 or more Banksand Credit Unions. Nearly 60% of all deposits are held inregions with 100 or more FIs.The opportunity for Community FI to stand out is limited atbest. Community FIs now have to develop attractive productofferings that are available nowhere else. Community FIsmust differentiate to survive! 5
  6. 6. Community FIs face significant challengesBankers‟ bread-and-butter product – checking account – isno longer a viable core. With the recent regulatory changes,most checking accounts (and by extension, mostrelationships) will be unprofitable. The era of OD/NSFs andInterchange fees subsidizing the cost of services are over.Worse, the customer base in most FI is highly skewed tomoney losing relationships. Most FIs rely on less than 20%of their customer base to generate total enterprise profits.With intensifying competitive environment, this trend isunlikely to improve without a concerted effort by individualFIs. 6
  7. 7. Bold actions are requiredFIs must refocus on activities and customers thatgenerate growth and profits. FIs must refocus theirattention to High Net Worth Customer Acquisition Online Marketing Increasing geographic footprint “virtually”These are the 3 things that distinguish a successful,fast growing and profitable FI from an “also-ran” thatwill continue to struggle. 7
  8. 8. A new platform will grow profitable customerswhile at the same time increasing FI growthand profitability.OptiRate provides FIs with a unique and innovative platformthat enables growth of High Net Worth customer base.By combining the best of class capabilities – OptiRate‟scustomer acquisition platform and FI‟s relationshipmanagement and cross-sale capabilities – the partnershipwill result in significant FI growth and improved profitability. 8
  9. 9. Talk with OptiRate today Serge Milman Serge.Milman@OptiRate.com 415.260.3403 (c) 800.319.6784 x600 (o)www.OptiRate.com | www.OptiRate.com/Banks | BankBlog.OptiRate.com 9

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