TAX MAN COMETH, ARE YOU READY?

At the next High Performance Workshop coming up on June 7th, we will be talking about product and marketing strategies to help banks gather more deposits. For example, if you attended one of our several sessions last year and implemented what you learned, you would have been well positioned to gather a greater share of tax refunds this year (it is still not too late). Because of a recent change, the IRS now allows taxpayers to direct deposit their refund into 3 financial institutions. Smart banks will find ways to make it easy for customers to have all 3 going to their financial institution. By doing so, taxpayers will choose not to send monies to other non-bank financial institutions (such as brokerage accounts or mutual funds) and banks will be able to keep a larger share of deposits. A successful marketing campaign would include education and access to Form 8888 (which allows for the transfer of funds to multiple accounts). In addition, banks might provide an incentive to their customers to deposit funds in a combination of IRA, savings, checking, money market or bank investment accounts. Offering to match funds (say up to $25 per account), giving gift cards away to customers that utilize all 3 accounts or providing a free enrollment into a VIP "savers club" are all ideas that some banks took back and implemented. Tax time represents one of the best times to capture retail funds, as financial issues are topical and anxiety is running high. Another effective product is a "goal setting account." Here, customers are encouraged to apply their tax refund towards a long-term goal. Such accounts are interest bearing and carry names such as "Italy," "College" or "New car." Once the goal is reached, the bank would credit the account with a bonus amount equal to a precalculated percentage of the goal. Minimum time would be 12 months with a minimum deposit of $500. This account would have a current rate of 1.75% with an extra 2.75% of the goal amount paid upon the achievement of the final goal. Since the goal amount can be exceeded, never reached or set so it takes longer than 12 months, the average cost to the bank is an estimated 3.23% in the current environment. By combining this account with tax education, banks have an effective tool to better gather both retail and small business deposits. At the High Performance Workshop, we will be covering more than 32 business and retail deposit accounts (plus product bundles), discussing which ones are best, and hearing from other bank executives about best practices in this area. If you are in need of deposits and want to build lower cost balances, don't miss this event.