Deposits are on the mind of many of us in the financial institution space. Gaining and retaining new accountholders are a focus within traditional institutions during 2024. In our most recent Raddon Research Insights report, Deposits and Investments: It’s Time to Start the Conversation of Retirement, we got the inside scoop on the deposit behavior of consumers during 2023 as well as their anticipated deposit plans for 2024.

With online institutions on the rise, uncertainty regarding the current economy and the ease of being able to switch to a new account, it is not surprising that our tech-savvy generations are opening new accounts at higher rates. One thing we learned from our study is that if consumers see a higher interest rate on a deposit account, they are willing to jump ship at a moment’s notice. It’s time to ask ourselves what we can we do not only to attract new accountholders but also attain and create customers for life.

Figure 1: Percentage of Consumers Who Opened a Deposit Account, by Generational Segment 

Who Opened a New Deposit Account in 2023?

Q: Which of the following deposit or investment services did your household open in the past 12 months? (n=1,527)

Source: Deposits and Investments: It’s Time to Start the Conversation of Retirement. Raddon Research Insights, 2023 

A common theme we found in our research is that not only did younger consumers open accounts at higher rates in 2023, but they are still on the hunt to open an additional or new deposit account in 2024. In fact, about one-third of Gen Z or Millennial consumers opened a new checking or savings account during past year. Even for deposit accounts that are not as common in today’s climate, such as money markets and certificates of deposit (CDs), Millennials were the generation with the highest percentage of openings last year.

While 15% for money market accounts or 17% for CDs is not nearly as high as the 35% of Millennials we are seeing in checking and savings accounts, this goes to show that this generational segments is focused on savings as well as their financial future. With Gen Z not far behind, these consumers are interested in seeing what is being offered in the financial world In 2023, they found appealing accounts and opened new ones because of it.

Figure 2: Generational Breakdown of Anticipated Deposit Account Opening

Younger Generations Are on the Hunt for
a New Checking or Savings Account in the Upcoming Year

Q: Which of the following deposit or investment services do you anticipate your household will be opening in the next 12 months? (n=1,527)

Source: Deposits and Investments: It’s Time to Start the Conversation of Retirement. Raddon Research Insights, 2023

Consumers opened new accounts in 2023, and they anticipate opening new deposit accounts in 2024. And if we take a look at anticipated savings accounts, Gen Z is leading the pack at 40%, with Millennials just behind them. Savings accounts, especially at online institutions, are looking more appealing each day. With just a quick Google search of “savings accounts,” the first one that pops up is an online-only option with Capital One, starting at 4.35% annual percentage yield. If a consumer who is trying to build a savings account during a time of economic uncertainty comes across an ad with an interest rate like that, they would be very tempted to open the account. Not only does it have a high rate, but it is easily opened online, which in turn fits well with today’s busy lifestyles. High rates, an easy application process and being able to build savings more easily are very attractive to today’s consumers.

If you look down the line at individual retirement accounts (IRAs), you can also see that nearly one-fifth of Millennials are interested in opening one during the next 12 months. They are looking for new savings and checking options while keeping an eye out for ways to help prepare and save for their retirement as well. When showcasing your deposit products, remember that a traditional checking or savings account is not the only worthwhile type of account, especially to Millennials. By showing that you can help with their savings needs for both today and their future, including retirement, you have a good chance at creating confidence and a long-lasting relationship with your accountholders.

Figure 3: Reasons for Opening an Online-Only Savings Account, by Generation

For Those Who Have an Online-Only Savings Account, Ease of Opening, Interest Rates and Low/No Fees Were the Deciding Factors

Q: Which of these factors encouraged you to use an online bank? (n=503)

Source: Deposits and Investments: It’s Time to Start the Conversation of Retirement. Raddon Research Insights, 2023

As mentioned earlier, there are many reasons why online-only savings accounts are attractive. For those who opened an account at an online-only institution, some reasons include ease of opening, higher interest rates and being able to easily access their funds. Baby Boomers and Gen X said they enjoy the fact that there are little to no fees.

Being able to easily open an account is very important to consumers regardless of generation. Today, many people are working full time, continuing their education, managing family responsibilities, and just juggling other daily tasks that life throws our way. Going to a branch and sitting through the process of opening a new account during typical business hours is not always convenient or even possible. While many institutions, online only or not, offer ways to open accounts online, how easy and seamless is the process at your institution?

Figure 4: Top Three Challenges While Opening a Deposit Account

Regardless of Generation, a Long Process or Website Navigation Issues Can Keep Consumers From Opening an Account at Your Institution

Q: What challenges or concerns did you face while opening a deposit account in person or online? (n=195)

Source: Deposits and Investments: It’s Time to Start the Conversation of Retirement. Raddon Research Insights, 2023 

When we asked respondents whether they faced challenges when opening their most recent deposit account, of those that stated that they did face challenges, the main issue across the board had to do with the length of the process. Consumers don’t want to go through a longer-than-necessary process and are looking for places that offer quicker solutions.

On top of stating the process took too long, many felt that the website was too difficult to navigate. When considering this challenge, it is important to look for internal solutions within your institution’s website and to assess your social media marketing. When posting a new account product, are you including a link that takes  readers directly to the account application? Or is the link simply taking them to the home page, where they then have to click and poke around to find the area they were looking for in the first place? When taking them to the source directly, you are eliminating the additional time spent looking, which in turn helps reduce the overall length of the process. .

Key Questions to Ask Yourself:

1.       How can I showcase important features, such as rates or rewards, on my current deposit products?

2.       Am I able to reduce time spent when opening an account online at my institution?

3.       Can my institution and staff showcase and discuss retirement products, such as IRAs, to all demographics to help build that lasting relationship with eager accountholders?

4.       In what ways can I stand out to those who are on the hunt for a new account in 2024?

Eagerness for feature-rich and convenient deposit accounts is on the rise. With some internal process reflection and understanding that savings and retirement are important topics regardless of generation, you can create those lifelong relationships with new and current accountholders.