Strategies for stabilizing your balance sheet
Planning your product development or marketing strategies for a given year can feel like a never ending back-and-forth between objectives. One month you’re flush with deposits and ready to focus on loans. Then a well-placed digital ad campaign leads to an influx of borrowers, and you have to swing the pendulum back to deposits.
There’s really no way to escape this cycle. But knowing what consumers want in both (and how to give it to them without sacrificing profitability), is key to navigating these changes with ease. We’ve rounded up some of our best blogs that highlight ways to drive deposit growth, engage borrowers, reduce loan risk, and more.
Ready, set, start balancing!
1. Drive profitability with products people recognize.
When you’re wanting to drive profitability, seeking deposits is a good place to start. But what do consumers want when looking for a place to put their money?
In the Information Age, research has shown that consumers want an up-to-date website, products from brands they know and trust, and rewards when looking for an account. Offering all three is a surefire way to boost account openings and drive deposits.
2. Offer 4% on checking accounts and still make a profit.
Consumers want rewards. You want to maintain and grow your bottom line. So where can you meet in the middle?
The secret behind offering high-interest checking — and still turning a profit — is adding qualifications and a balance cap. Qualifications drive behaviors that make and save you money, while the balance cap means you’ll be paying a “blended” rate (not the full promoted rate) to those high-net-worth individuals.
3. Know the five things consumers want in a loan.
Now that you’ve hit your deposit growth goal, it’s time to focus on the other side of your balance sheet. If you’re going to balance those books, you need to know what consumers are looking for in a loan — and be ready to give it to them.
Times have changed, and lending should too. Today’s consumer wants:
1. Online and mobile management.
2. The ability to speak to a real person.
3. A low rate.
4. Control over payments.
5. A fast application process.
Average loans fall short of offering all five of these features. To truly give consumers everything they want in a loan, the lending landscape needs to change with products that can engage borrowers on a deeper level.
4. Reduce risk in your loan portfolio.
Okay, now you’ve got the loans. But oh no! Borrowers are falling behind on their payments. There is a way to reduce risk in your loan portfolio without having to offer rate discounts for automatic payment sign-ups.
Take-Backs™ encourage borrowers to pay ahead on their loan while allowing them to access those funds if they need them in the future. Worried about losing interest income? Early payoffs mean you can redeploy those funds, often at a higher rate of return.
5. Uncover hidden deposits in your market.
With your loans portfolio growing, you’re ready to move back to deposits. Maybe you think you’ve tapped out your market. Before you turn to purchasing deposits, take a look at where market share may be hiding.
One way to do this is by checking out the competition: look at the FDIC deposit share analysis (if you’re a credit union) or the NCUA’s (if you’re a bank). Another is a bit trickier. Online deposits are sweeping the market but aren’t represented in any analysis. Take note of outgoing ACH transactions in your account holders’ checking and savings accounts the day after the same amount has been deposited. That could be a sign that they’ve opened an account with an online-only institution.