Falling energy prices have been front and center in the headlines lately, which is a good thing for retail-oriented banks. Experienced retail bankers understand that consumers often react to lower energy prices by treating it as a windfall and increasing their savings rate. Statistically, the correlation over the last 5 years is that energy prices explain approximately 68% of the savings rate – a correlation that is exceedingly predictive. The question is, what is your bank doing to take advantage of this trend?
Don’t Let This Opportunity Pass You By
With retail gasoline pricing down around $1.70 per gallon at many parts of the country, consumers have been able to bring this lower cost into disposable income. Smart consumers put this cost reduction directly into savings, which is one reason why many banks have seen deposits increase over the last several months.
Putting This Into Action
Of course, not all your bank’s customers will be sensitive to this effect and many will need reminding to increase savings. About 56% of community bank customers have less than $1,000 in BOTH savings and checking. Thus, creating a marketing campaign that ties savings/retirement to lower energy prices is exceedingly effective. In fact, running a savings email campaign now, as opposed to when energy is above $80 per barrel is more than 30% effective. Creating additional incentives such as free savings account opening, bonus dollars for reaching a specific increase, and free retirement planning guide or similar (anything but rate) will further increase your marketing effectiveness in this area.
Every headline about lower energy can be a catalyst to increase deposits cheaply and without having to advertise a higher than average rate. Remind your customers now and help them better prepare for the future while increasing engagement and building core balances.
Submitted by Chris Nichols on January 20, 2016