By Meg Cipperly, Senior Director of Insights
With interest rates on the rise, competition is heating up in the online savings space. Consumers have more options than ever when it comes to where to keep their cash. How can banks differentiate themselves? Offering additional value through digital savings tools has been one popular method that banks, fintechs, and credit unions alike use to articulate their unique value proposition.
Table Stakes Program: Automatic Transfers
Automatic transfers, perhaps the most widespread savings tool available, help consumers develop healthy savings habits. According to research from Competiscan, automatic savings features were one of the most desired financial wellness tools available, with 55% of respondents indicating that they would be likely to use an automatic savings tool to help them manage their financial health. The ability to set up a fixed automatic transfer amount from a checking to savings account is a basic capability among most products in the marketplace, but some consumers may be hesitant to use these tools for fear of diverting too much of their balance from their checking account. The next wave of innovative transfer tools looks beyond a fixed transfer value to maximize potential savings without the risk. In the past few years banks have released tools that address this consumer concern by using artificial intelligence to optimize automatic transfers, personalized to the consumer’s real-time spending habits. For example, Money Scout by Huntington and Ally Surprise Savings are automated tools that learn by analyzing deposit and withdrawal patterns over time, and automatically transfer available idle cash from checking to savings
Tip: Establishing automatic transfers can help create stickiness with banking customers. With dozens of no fee, high yield savings account options in the marketplace, an effective tool to encourage customer loyalty is to promote the use of linked checking and savings accounts with automatic transfers. Several banks achieve this by promoting both banking products together through combination acquisition campaigns and encourage establishing automatic transfers during the onboarding process.
Trending Program: Round Ups
Tools that allow consumers to round up their purchases to the nearest dollar and transfer the change into their savings account are popularly used to promote automatic savings habits. Round up tools have existed in the marketplace for many years; Bank of America has been promoting its “Keep the Change” tool for well over a decade. However, they became popularized in 2018 as many fintechs like Chime and Acorns highlighted their digital savings tools as a means to differentiate themselves from traditional banks. This fintech movement has led more traditional banks and credit unions to release similar capabilities. As a result, the number of emails observed in the banking sector that reference round up tools has grown by over 700% in the past five years. Round up campaigns often focus on ease of use within primary messaging, highlighting that these tools allow consumers to add to their savings without requiring any extra work on their part. Notably, when announcing its new Spend & Save tool, Citi provided a convenient QR code call-to-action to help reduce friction during the enrollment process.
Tip: Encourage tool adoption with a small reward. Sweepstakes, matching, and small cash incentives are all potential options in encouraging users to enroll in available savings tools.
Innovation: Goals-Based Savings Tools
Goals-based savings tools provide an opportunity for banks to position themselves as a trusted financial partner in helping customers reach their short- and long-term financial needs. These tools often let customers organize their bank account to set aside funds for specific purposes— from building emergency savings to planning for longer-term financial goals like a down-payment on a home. In addition to providing a convenient and digital way for consumers to track their savings progress, innovative tools in this category may also provide guidance and education. Notably, Bank of America’s Life Plan tool provides insights and advice on savings progress that can be customized throughout important life changes.
Successful Savings Tools Offer Convenience and Customization
In conclusion, although the tools in this analysis provide a wide array of capabilities, they each promote a service offering that provides convenient and customizable experiences for banking customers. When offered, these personalized digital banking experiences can help build customer engagement and form lasting relationships.
Final Tip: Remind customers what savings tools are available. Recent Competiscan research found that 30% of consumers didn’t know if the financial wellness tools available to them are addressing all of their needs, highlighting a lack of understanding from consumers on available services and their impact. Confirmation campaigns tracking current savings progress, as well as yearly summaries, can help emphasize available tools and remind consumers of the value their current bank is providing.