Executive Summary: While retaining and growing deposits today involves more challenges than in recent years, focus, discipline, and culture across a bank will build share and increase deposit productivity.
Two weeks ago, I moderated FIC’s first webinar of the year. Given the industry’s focus in this area, our topic centered on deposit retention and growth. Our three guest speakers provided complementary but different perspectives:
* Ric Carey, EVP Umpqua Bank and head of its retail area, spoke from the perspective of the community player that focuses on selected segments and takes advantage of being well established in its core market (Oregon).
* James Daley, EVP of City National Bank, runs Treasury Management for this regional bank operating in California, Nevada, and New York. James focused on City National’s long-time focus on deposits and cash management, as well as its emphasis on targeted marketing.
* Ginger Siegel until recently has been head of small business sales for WaMu and before that head of small business at Citibank. She provided the big bank perspective in contrast to the other speakers.
We thought it would be useful to bankers focusing on deposit-raising to read some of their comments (for those interested, the one-hour webinar with slides can be purchased at
www.ficinc.com/checkout.php). Comments included:
Ric Carey: “Take a Relationship Pronto”
1. Umpqua’s tellers are “Universal Associates” who are cross-trained in many areas and highly focused on customer service, even receiving Ritz Carlton training. Ric emphasized the need for banks to differentiate themselves.
2. During the call, Ric mentioned that the associates can match a deposit rate being offered by a competitor for what he terms a good relationship customer. “I’m not going to let some of these little banks that are in trouble pick off our customers.”
3. The bank operates without silos. For example, Rick sits next to and meets regularly with the commercial banking head.
4. Management, seeing some portfolio deterioration, shifted weak loans to a special assets group. That allowed the bank to move sales-oriented RMs away from credit management to focus on the deposit gathering. Umpqua thinks is a much better approach than the “cradle to grave” philosophy of other banks.
5. Umpqua is taking advantage of the increase in mortgage loan refinancing to get deposits from new customers.
6. Jumbo mortgage pricing will be reduced by as much as 3/8 percent depending on the level of balances maintained at the bank.
7. They have developed their own “TARP” program but by that they mean “Take a Relationship Pronto.” Without badmouthing competitors, they focus their marketing at the customers of some of the weaker players in their geographies, emphasizing Umpqua’s performance strength. They have had great success at taking advantage of the instability of other banks.8. Credit unions are increasingly strong competitors for business accounts, taking advantage of the poor image of the bank industry.
James Daley: Targeting the Deposit Rich
1. City National has a long-established group, Specialty Deposits, that focuses its deposit gathering effort on title companies, escrow businesses, homeowner associations, commercial property managers, and similar groups.
2. CNB aims at banking the principals of a company as well as gaining the commercial business.
3. Rather than leading with a personal mortgage, the deposit relationship may result in the bank providing mortgages. The mortgage is an “accommodation” to wealthy customers.
4. “We compete on rate when appropriate but do not lead with rate.”
5. With its analyzed cash management business, the Earnings Credit Rate (ECR) is down and companies are paying an increased amount of hard dollar fees, potentially resulting in some customers eliminating services.
6. Deposit and loans are linked. They have taken business from competitors and gained deposits when they lend in situations where the current bank was unwilling or unable to do so for reasons tied to capital or liquidity.
7. Problems at some of the largest banks have resulted in internal distractions that City National has been able to take advantage of.
Ginger Siegel: Become a Part of the Triangle of Advisors
1. In the current economic environment, cash management has to involve helping customers earn as much as they can from balances on deposit.
2. Now, many good companies that had not borrowed before need credit; banks should be proactive in meeting this need.
3. “Price is only an issue in the absence of value.” Consumers will pay more for things they think are worth more.
4. The big banks fend off smaller players by building in a deposit-focused sales process, one that anticipates a customer need rather than waiting for a crisis.
5. “We can’t hide from our customers during these times.” Proactive sales and sales management are critical.
6. Focus on industries that will continue to have a deposit stream, for example, physician services. Bankers need to be as well trained on the health care industry as they are on products. Understand the doctor’s issues, for example slow reimbursement from insurance companies and its impact on cash flow.
7. Banks need to take an advisory approach and become part of the triangle of advisors to commercial clients, along with attorneys and CPAs. Attorneys and CPAs profile their clients. Banks need to provide a team of experts rather than needing to rely on one person.
8. The customer profile belongs to the bank and becomes part of the bank’s history, even if the banker leaves. “A good profile can become a sales roadmap” and is critical to the sales process.
9. Every mortgage application should be reviewed to determine self-employment; that leads into a small business sale effort.
10. Create a business and personal product bundle to entice customers to bring more business to one bank.
11. “Look at a bank horizontally” to take advantage of the opportunity to sell more to business owners; break the vertical silos that exist.
Final Thoughts
A unifying culture, consistent sales process, marketing selectivity, and effective execution day after day, comprise the critical components of deposit success. Pricing plays a tertiary role to market positioning and customer relationships.