ABA Banking Journal - August 2008 - (Page 54) SPECIAL ADVERTISING SECTION ABA Banking Journal’s White Paper for August 2008: Risk Management Tools EXECUTIVE SUMMARY For the full article go to http://www.ababj.com The Keys to Deposit Acquisition Metavante Corporation Phone: 800-822-6758 Web: www.metavante.com I t is simplest to think of deposit growth as essentially a zero-sum game: an individual bank is going to rapidly add lower-cost deposits only by beating the other banker to the potential depositor, capturing that business, and retaining it. prescription for an eventual sale in order that shareholders may recapture their investments. Allocating staff and establishing sales goals based on market potential. It is understandable that bankers strive for control of personnel expense by managing branch staffing, but it is likewise clear to us that the issue facing banks is not so much the quantity of bank staff as the disposition of that staff and the tasking of bankers to capture available business. Identifying and focusing on the volume of business that should be developed given market potential. Less reliance should be placed on merely adding a percentage of last year’s results to set the goal for this year. This leads to the undesirable effect of embedded underperformance, rewarding the wrong sales force members for nothing more than having the good fortune to be in a good market. Redeploying from low-potential markets to fund more productive expansion. The resources to pay for marketing and greater market density can be made available by exiting underachieving locations and markets that are absorbing a disproportionate level of spending. Further Short-Term Actions to Build Deposits 1. Determine where the bank stands in terms of market share across all products by focusing on deposits. 2. Ascertain the causes of gaps found in a market share analysis. 3. Do not reward account-churning sales tactics. 4. Use insights about market potential to rethink branching strategies and tactics, with a clear eye toward existing markets where the bank cannot be successful given its current position and capacity for further investment. By redeploying scarce resources to higher-potential opportunities, bankers can make the most of a challenging situation. Strategies and tactics for growing deposits In our view, the keys to successful, cost-effective deposit acquisition include: Aggressive marketing and promotion of deposit products and services. Merely opening a new office, offering Internet account openings, or operating a 24-hour call center in an attractive market will not generate new business that maximizes deposit market share. In our judgment, the single largest impediment to deposit acquisition is a lack of name recognition, including insufficient market awareness of the bank’s products and services. Waiting for word-of-mouth to spread and bring business leaves bankers standing around with little to do. If customers are to buy a bank’s offerings, the bank has to be seen and heard. The array of cost-effective media for disseminating a bank’s message has never been greater. It is time to move beyond that ever-present rate ad to vehicles more in tune with today’s target customers. A bank should talk to its ad agency, get some creative help, and start thinking and acting outside of the box. Achieving critical mass and avoiding a minimal presence. Scale economies and utilization efficiencies matter in capturing new business and operating a profitable bank. Achieving a reasonable semblance of size in any market is critical. More offices in a smaller geographic footprint are almost always preferable to single office outposts spread across a larger region. While there may be some psychological reward derived from being the number-seven bank in a five-bank market and trying harder, this mindset usually ends up being the 54 AUGUST 2008/ABA BANKING JOURNAL http://www.ababj.com//content/category/11/21/132/ http://www.metavante.com http://www.metavante.com
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