It’s also important to minimize friction wherever possible in the digital channels you offer. According to FIS, 50% of customers will abandon a digital loan application if it takes more than three to five minutes to complete. 3. Poor Customer Service Research by Personetics involving 5,000 global banking customers found that 63% reported their banks did not provide money management advice in the past three months, leading some to consider switching. This points to a broader issue: Customers don’t just want transactions, they want guidance. Again, community banks can leverage their relationships to deliver the personalized experience their customers are asking for. Not every departure is preventable, of course. For example, according to a Bankrate-cited survey by Bank Clarity, relocation is the No. 1 reason customers switch banks, and 61% of people who have left their bank did so for reasons other than dissatisfaction with their current institution. This is a nuanced but important finding because it shows a significant portion of attrition is not necessarily preventable through product or service improvements. It does, however, argue for developing creative retention solutions, such as a robust digital/ remote banking capability that gives you a shot at retaining relocating customers. McGill says that in many cases, retention starts as soon as the account is opened. The best way to address attrition may be to prevent the relationship from becoming vulnerable in the first place. He recommends creating a more intentional onboarding experience to cement relationships early. Banks can design a purposeful outreach plan that will contact new customers at intervals that make sense. He cautions that the objective should be meaningful, relevant contact, not simply another sales opportunity. Banks also should examine whether customers are being placed in products that fit how they intend to use their accounts, and McGill says moving beyond a one-size-fits-all product structure is important. Understanding what matters to the customer at account opening can prevent frustration six months later. “The best way to deal with diminishment or attrition is to get it right, out of the gate,” he said. Again, onboarding and personalization are two areas where community banks can shine, using their relationship-based model to differentiate themselves. Turn Data into an Early-Warning System Since many community banks lack dedicated analytics teams to monitor diminishment behaviors, McGill recommends elevating deposit retention to a strategic level. Banks can use available data to identify accounts that are increasingly vulnerable. “Seeing the data and understanding the behavior is key and will inform ways you can keep the customer,” he said. “It’s important to be asking the right questions.” Artificial intelligence is being used as a practical tool in banks to identify trends and answer exactly these kinds of questions. Rather than investing in an expensive enterprise-wide initiative, AI can now be used relatively easily by banks to: • Develop their own models around their own data. • Establish regular data extracts. • Identify behavioral triggers and prioritize accounts by risk. • Create a repeatable process for determining the appropriate next action. The goal is not simply to collect more data; it is to turn existing data into insight and timely, strategic action. The ABA confirms that digitally mature institutions increasingly use data to personalize engagement and anticipate customer needs rather than simply react to them. Building a Deposit Retention Framework McGill advises his clients to build upon a simple framework as they refine their deposit retention strategy. 1. Identify Vulnerability ◦ Determine which accounts show behaviors associated with attrition. ◦ Establish a way to prioritize accounts based on the likelihood of leaving. 2. Create Meaningful Engagement ◦ Reach out based on what the customer’s behavior suggests they need. ◦ Avoid turning every retention interaction into a sales pitch. 3. Deepen the Relationship ◦ Determine whether the customer has the right products for their needs. 25 NEBRASKA BANKER
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