In 1858 London, the city faced a grotesque waste crisis known as the Great Stink. At the time, the city was undergoing an industrial revolution, meaning plenty of industrial waste to accompany the human waste that clogged both streets and waterways. These waterways, like the Thames River, were likewise used for drinking and bathing, causing a spike in water-borne diseases. Civil Engineer Joseph Bazalgette faced the challenge with creativity and ingenuity. He designed a massive underground sewer system utilizing 318MM bricks, six pumping stations, and several defunct rivers to construct 82 miles worth of sewers for waste remediation. His original system was so forward-thinking — even using brick designed to resist water erosion — that much of it is still in use in London today. The sewer system’s legacy proves that innovative solutions to acute problems can also have an enduring impact. An acute issue that community financial institutions (CFIs) have been facing since rates began climbing in 2022 is the war between liquidity challenges and an increased cost of funds. According to What’s Going On In Banking 2025, a report on banking trends from Cornerstone Advisors, cost of funds and attracting new customers are the two most important challenges for CFIs in 2025. To respond to these pressures, CFIs must think beyond conventional rate-driven tactics. The most effective solutions today will combine creativity, resourcefulness, and long-term thinking. This first article in our two-part series explores five strategic ways CFIs can grow deposits — without raising rates — by leveraging their inherent strengths and delivering value through innovation, trust, and convenience.Five Creative Ways to Grow Deposits Without Raising RatesAs competition for deposits continues, CFIs don’t have to chase top-of-market rates to stay competitive. By leaning into their strengths — community trust, relationship banking, and strategic flexibility — they can grow deposits without compromising profitability. Here’s how:1. Leverage Local Advantage
- Engage deeply in your community. Institutions that engage with their communities — through events, sponsorships, and partnerships with local organizations — do more than build goodwill. These connections reinforce trust and visibility, especially when paired with action. Reinvesting customer deposits into local loans closes the loop, showing how CFIs support the businesses and people they serve. In tight-knit communities, that visible impact drives loyalty and perhaps even a steady stream of referrals.
- Take advantage of branch closures. CFI branches aren’t as simple to set up as other brick-and-mortar businesses; most require specialized infrastructure like drive-thrus, ATM lanes, and vaults. As an alternative, consider acquiring or leasing a closed branch location. These ready-made facilities can help you expand your footprint quickly and cost-effectively. If taking on a physical location isn’t the right fit, you can still market your CFI as a digital-first option to residents or businesses in the area — particularly those left unserved by the closure.
2. Digitally-Driven Convenience
- Make banking seamless for all customer types. Customers expect easy, intuitive digital experiences — from mobile banking and bill pay to digital wallets and fraud alerts. Expanding these offerings helps CFIs compete with larger institutions and fintechs while appealing to time-strapped business owners and younger customers.
- Treat gig workers and freelancers as business customers. According to the freelance marketplace Upwork, 64MM gig workers currently operate in the US, working as everything from rideshare drivers and journalists to pet sitters and personal assistants. In 2023, gig workers added nearly $1.27T to the national economy, a number that analysts expect to grow by 20% every year from 2024 to 2031. This population would benefit from better access to credit, flexible payment solutions, and other services that CFIs routinely provide to their business customers. Treat gig workers like businesses in this respect and you’ll attract them as clients.
3. Innovate with Product Design
- Offer unique CD terms. When customers put money in a certificate of deposit, they trade liquidity for a higher rate — but standard terms don’t always fit their plans. A customer saving for a big purchase might want more than a 6-month return but hesitate to lock funds for a full year. Offering less common terms, like 9 or 10 months, adds flexibility and may capture deposits that would otherwise stay liquid.
- Incentivize with purpose. From referral bonuses and account-opening incentives to tiered interest rates or savings gamification, well-structured promotions can bring in new deposits without disrupting your overall pricing strategy.
4. Prioritize Personalized Service
- Pair data insights with a human touch. Use customer data to tailor offers and outreach — but make sure every digital effort is backed by strong in-person service. This high-touch, high-tech approach allows CFIs to deliver value beyond rate comparisons.
- Identify and support loyal depositors. Not every customer chases rates. Use behavioral indicators (like tenure, product usage, and transaction volume) to identify “stickier” clients and focus retention efforts accordingly.
5. Build Trust Through Transparency and Support
- Highlight safety, clarity, and service. Customers want to know their funds are secure. Reinforce trust through transparent communication around fees, deposit insurance, and rates. And make sure customer support — whether digital, phone, or in-branch — is fast, friendly, and empowered to resolve issues.
As CFIs work to grow their deposit base in 2025, rate pressure doesn’t have to dictate the strategy. These creative, community-rooted approaches offer cost-effective alternatives that help institutions stand out — and stay profitable.Tomorrow, in Part 2 of our deposit growth series, we’ll shift the focus to commercial deposit growth — exploring how segmentation, industry insights, and rate sensitivity analysis can help CFIs tailor their approach and maximize value from their business banking relationships.
