Driving Deposit Growth through Innovation

As volatility in the external market continues to make investors nervous, credit unions have the opportunity to get a jump on deposit growth in 2008.

Volatile External Market Can Benefit Credit Unions

The Federal Government announced last week that it is hammering out the details of a plan to put money in the hands of middle-class taxpayers. Amounts will vary based on marital status and number of children. The goal? To drive additional spending in an attempt to spur the struggling U.S. economy, however history shows that often this money is put into savings accounts instead. How much of this estimated $150 billion in new funds will your credit union see?

Deposits are a major focal point for credit unions on a year-round basis. However, at the start of each calendar year this push becomes particularly important. As members begin to prepare their finances for tax season and receive year-end bonuses, credit unions look to find a way to capture those funds as deposits. Not only can capturing these funds lead to positive deposit growth for the credit union, but it can also be the beginning of healthy savings habits for members.

This year credit unions have an additional ally in the fight to procure deposits, the volatile stock market. The U.S. economy has been experiencing quite a bit of turbulence over the last few months. This instability may drive more members to look for a safer place to invest their money, offering credit unions the perfect opportunity to position themselves as a safer financial alternative.

Innovation is the Key to Growth

Regardless of changes in the external market, credit unions still have to be proactive in order to compete for these funds. The nation’s largest banks are aggressively advertising for IRA deposits already with multiple, full page ads in leading newspapers. Others like USAA have stepped up their direct mail campaigns.

Credit unions can use the external market conditions as motivation for internal innovation in an attempt to grow their total deposits. New products help credit unions enable deposit growth, but also develop a deeper member relationship. Development of this type of innovation is never easy, but credit unions can take lessons from what others have learned. Last spring, Diana Dykstra shared her thoughts on innovation with CreditUnions.com to rave review of our readers.

While not every innovation will work in every credit union, learning from the steps others took when developing these offerings can be of great help. With this knowledge, credit unions can begin the process of developing their own custom offerings that work best within the credit union and for its members. Driving deposit growth is important to any credit union but, based on the nature of the industry, credit unions should ensure that member benefits are at the core of every decision. This cooperative mindset allows for a win-win situation.

The deposit market in the first quarter makes it even more important that credit unions are looking to begin developing and implementing these products as soon as possible. To hear from credit unions that have recently implemented innovative deposit offerings please join us Tuesday, February 19th at 2pm EST for Learning to Innovate: How to Design and Launch New Products to Drive Deposit Growth. These strategies for addressing needs, developing, and finally launching a new savings vehicle can help you tailor their suggestions to your credit union’s individual needs and goals.