2025 retail banking: How to win the battle for deposits
Capturing the deposits and loyalty of younger generations doesn’t have to be as daunting (or as costly) as it might seem.
As we approach 2025, credit unions face a critical challenge: winning the battle for member deposits in an increasingly competitive market. Millennials may have driven the initial race for online and mobile banking, but tech-savvy Gen Z and Generation Alpha will demand an even more digital, personalized and seamless experience.
The good news for credit unions is that capturing the deposits and loyalty of younger generations doesn’t have to be as daunting (or as costly) as it might seem. Indeed, the biggest mistake would be doing nothing while your competition embraces and capitalizes on innovative digital solutions.
Taking action now by choosing the right partner and allocating funds to your 2025 budget can set your credit union up to earn low-cost deposits and become the primary financial institution (PFI) for more people in your communities.
Win the battle for retail deposits in 2025 and beyond with these three tips:
- Understand Gen Z & Generation Alpha
The younger generations cannot and will not be ignored when it comes to banking. Gen Z (born between 1997 and 2012) has an estimated spending power of $360 billion in the U.S. Meanwhile, the newest generation, Alpha, has $24 billion in spending power and influences $500 billion in family purchases annually—and will soon be old enough to make their own money and financial decisions.
CUNA Strategic Services partner Goalsetter declares, “With 4 million digital-first Gen Z-ers projected to open bank accounts annually until 2026, per Insider Intelligence⁹, and 2-billion-strong Gen Alpha right around the corner, there is no going back to traditional banking. Gen Z has laid the blueprint, and Gen Alpha will take it to the next level.”
These two groups represent an incredibly lucrative opportunity for credit unions—if you can reach them. Doing so requires you to understand their preferences and meet their demands.
For example, Gen Z are picky spenders, researching shrewdly before spending their hard-earned money. They’re motivated to find the best deals yet unwilling to compromise on quality.
And members of Generation Alpha are the first true digital natives, having grown up with smartphones, tablets and the omnipresence of the internet since early childhood. While preferences are still emerging, it’s clear that this generation wants customized products, services and experiences—with little patience for friction in the journey.
Though each group is unique, two things are certain: they both represent a considerable percentage of your current and future member base, and a seamless digital approach is essential for any credit union that wants to gain more deposits and loyalty.
- Explore innovative digital banking partners and solutions
How do you reach, attract and retain the elusive younger generations? It’s perhaps one of the biggest challenges facing financial institutions today.
Industry experts say younger consumers don’t fully understand or buy into the concept of a “primary financial institution.” With apps for everything at their fingertips and neobanks and fintech marketing directly to via mobile devices, it’s easy for Gen Z and Alpha to pick the loudest, cheapest and/or trendiest provider for the service they need at the moment they need it. If your credit union isn’t marketing online and through social media, it won’t even be a contender for the deposit battle.
The key is to find partners in the digital banking industry whose solutions have evolved with the times. Data intelligence, automation, targeted marketing and a digital-first approach should be cornerstones of your account acquisition and retention plans.
Oracle experts advise, “Establishing a robust financial management ecosystem with relevant partners can help banks offer comprehensive financial management and become leaders in retail banking in 2025.”
Third-party experts with solutions that check all these boxes can help you win tech-savvy account holders away from the competition and be the entry point into banking for Generation Alphas when they’re old enough to open their first account.
- Maximize ROI, relationships and engagement with proven solutions
To improve the effectiveness of your acquisition marketing dollars, engage new and existing account holders, form sticky, long-lasting relationships, and team up with experts who can deliver solutions with a history of achieving all these goals.
Acquisition and engagement solutions should use data intelligence to provide a comprehensive strategy for attracting new accounts through social media, direct mail, automation, and digital marketing. That also applies to the “reacquisition” of existing accounts to boost the activity and deposits of account holders who may have become inactive after their initial onboarding.
A referral program should be a big part of the mix, too, as studies have shown that referred accounts maintain higher balances and stay longer.
Comprehensive digital strategies to win the deposits you seek without maxing out your resources include:
- Digital account acquisition that drives new accounts and deposits, with a guaranteed ROI of 3-to-1 (average ROI is 5-to-1.)
- Successful onboarding & engagement that increases direct deposit completion and mobile banking, with a guaranteed ROI of 2-to-1 (average ROI is 3-to-1).
- Tiered debit card program to generate revenue, card swipes and loyalty by tying premium rewards and benefits to the debit card, with zero cost to your financial institution.
Now is the time to implement data-driven, automated, digital-first strategies that appeal to younger generations—before they head to the megabanks or online providers. With Velocity on your side, you can future-proof your credit union and be poised to win Gen Z and Generation Alpha deposits—without stressing your budget or team.
To find out more about how The Retail Performance Engine™ can help make that happen, contact Velocity Solutions today.
