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The power of primacy: unlocking growth starts with the direct deposit
In a rapidly evolving financial landscape, banks face a pressing challenge: how to attract and retain customers in an era where consumer expectations are higher than ever. The recent Pinwheel's Power of Primacy Report, conducted in partnership with The Digital Banking Report, sheds light on a critical aspect of this challenge: the need to streamline the direct deposit switching process to drive account activation and deposit growth. Pinwheel and The Digital Banking Report surveyed 200 bank and credit union executives with over $500 million in deposits.
The current landscape
The report highlights a significant disconnect between banks' customer acquisition strategies and consumer behavior. While banks continue to invest heavily in account opening incentives, such as cash bonuses and promotional offers, these efforts often fall short of their intended goal. To the dismay of banks, although they spend high acquisition costs to attract new customers, many of these accounts remain dormant.
According to the findings, a staggering 40% of consumers never even activate their accounts, citing the complexity of the direct deposit switching process as a key barrier. This trend is particularly concerning in the wake of recent economic challenges, including the Collapse of Silicon Valley Bank and the subsequent outflow of bank deposits as consumers seek out better rates and services.
The missed opportunity
As banks grapple with the fallout from these challenges, they must recognize the missed opportunity presented by the current state of direct deposit switching. The research reveals that a vast majority of consumers, particularly high earners, are willing to switch banks if they can easily transfer their direct deposit digitally.
Underscored by the fact that most consumers are driven to change banks by the desire to find better products and services as a primary motivation for switching banks, it's clear that traditional incentives alone are no longer sufficient to drive customer acquisition. In the face of competition from neobanks and other fintech disruptors, banks must prioritize innovation that addresses the root cause of customer dissatisfaction: the cumbersome and time-consuming process of switching direct deposits.
The path forward
To unlock growth and achieve account primacy, banking executives must prioritize simplifying the direct deposit switching process. By leveraging technology and automation, banks can streamline this critical step in the customer journey, reducing friction and increasing activation rates.
The findings from this report are a call to action for banks: to remain competitive in an increasingly crowded market, they must rethink their approach to customer acquisition and prioritize initiatives that simplify the banking experience. By making direct deposit switching easier, banks can unlock growth opportunities and solidify their position as the primary financial institution for consumers.
Download the full report here
