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Growing Deposits Through Financial Coaching

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A series of rate hikes has made deposit growth strategies top of mind for banks this year.

Bankers are under tremendous pressure to find ways to attract and keep deposits on their balance sheet. One way for them to do so is by strengthening existing digital banking platforms to shift away from personal financial management tools, or PFMs, to personalized financial guidance, or PFG.

Banks have relied heavily on PFM tools to increase engagement. The problem is that PFMs lead to disengagement, hurting a bank’s ability to attract and retain deposits. That’s because traditional PFMs focus on consumers’ past spending behavior but don’t actually tell them how to improve their financial situation. This can lead to users feeling unmotivated to continue using the app without positive encouragement. Integrating PFMs into a digital banking platform can cost banks thousands of dollars, and low engagement means little return.

Unlike PFMs, PFG can offer guidance on what customers can or should do with their money to meet specific goals, like paying off debt, starting an emergency fund or building wealth. The bank can pinpoint exactly where a customer is on that journey and coach them on improving their financial fitness by providing products and services that meet their specific needs at precisely the right moment. It’s like giving the customers their own dedicated financial coach in their pocket.

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