The name of the game for banks and credit unions in 2024 is shaping up to be “rate-agnostic growth strategies.” The conversation has shifted from “Will the Fed cut rates this quarter?” to “Will the Fed cut rates this year?” In fact, there are even slight hints that rates may tick up a bit if inflation numbers and other critical factors don’t start to trend in the other direction.
No, the sky isn’t falling. But banks and credit unions need to settle in for a longer haul in this high-rate environment and develop rate-agnostic growth strategies so their success doesn’t hinge on the favorable actions of Jerome Powell.
The good news is that signals like rising loan application volume and increasing housing inventory point to growing impatience among consumers. More people are deciding they don’t want to put life events on hold any longer as they wait for rates to drop.
The key for financial institutions is getting ahead of this rate-agnostic consumer activity by using Customer Intelligence to anticipate financial needs around these essential life events, so they can engage at the right time and be there for the moments that drive lasting loyalty.
Life goes on—even in a high-rate environment
Reading reports and forecasts in the financial industry over the past 18 months, you’d almost think that consumers have completely put their lives on hold as they try to wait out high rates. Rates undoubtedly play a role in many consumer decisions. Yet the reality is that by and large, life goes on for the typical consumer. In the last two years, despite the doom and gloom of rising rates:
- 7 million babies were born
- 3 million couples got married
- 50 million people switched jobs
- 7 million people hit retirement age (65)
- 1.5 million couples got divorced
*Source: https://www.keepingcurrentmatters.com/2023/11/13/life-changing-events-that-move-the-housing-market/
Life events drive your biggest growth opportunities
We know that most of the demand for new financial products and services centers on big life changes and life events like these.
Take a woman who just got married, for example: Statistically, we know there’s a high likelihood of her opening a new credit card in the next 30 days. She’s also much more likely to be in the market for a new car—or a new home—in the next six months. Newly married couples often open joint checking or savings accounts. And if her spouse isn’t already a customer or member, you have an opportunity to convince them to move their accounts from their current financial institution.
Or consider a person who just changed careers: He may be looking to move to reduce his longer commute. Perhaps he’s now fully remote and looking for a HELOC to build out his home office. His income may have increased, and he may be interested in a CD or money market to make the most of his additional earnings.
Of course, life events aren’t always sunny. But it can be even more important to be there for consumers in the tough times. Take a couple going through a divorce: If they own a home together, the split will almost certainly lead one of them to look for a new home. If they opt to sell their home and split the proceeds, this often brings HELOC demand, as they look to fix up their house to get maximum return on the sale. And they may also be splitting up joint accounts into individual accounts.
These types of life events don’t always involve a specific financial need, but they do present opportunities for bankers to engage their customers and members in the moments that matter and continue building trusting lifelong relationships.
Using Customer Intelligence to get ahead of life events
With old-fashioned notions of consumer loyalty fading, the best way to capture these growth opportunities is by showing up for customers and members when they need you most—providing education, information, and guidance as they navigate decisions around big life events.
Moreover, consumers are hungry for this trusted guidance. They want their financial institutions to proactively reach out and help them through these milestones. These are invaluable moments not just to earn the specific business of a new loan or checking account but to cultivate trust and loyalty for life.
Banks and credit unions already have many of the components they need to understand consumer intent. But far too many aren’t doing enough with their customer and member data. That’s where Total Expert comes in—helping to unlock those intent signals and empower a new kind of life-centric engagement strategy for banks and credit unions.
With advanced analytics and lookalike modeling, financial institutions can access Customer Intelligence that provides early insights when consumers are shopping for their first home, expanding their family, changing careers, or thinking about retiring. Armed with those insights, you can reach out with hyper-personalized messages at exactly the right time, giving people the helpful information and guidance they want.
Consumers grow impatient—are you ready to be there at the moments that matter?
Rates may stay high for the foreseeable future, but consumer behavior is starting to adapt. People don’t want to wait to make big life steps, particularly as they recognize that, even when rates do fall, they’re not returning to pre-pandemic levels.
In mid-March, Redfin reported the biggest increase in home listings since June 2021, along with a 10% bump in mortgage applications. That aligns with what we’re seeing with our Total Expert customer data: March was the best month for new loan applications in the last six months—part of a broader trend of higher application volume in Q1 2024 compared to Q4 2023.
While a significant market rebound isn’t expected in the immediate future, quality growth opportunities still exist. Banks and credit unions can’t afford to wait around for consumers to come to them with their needs—you need to be proactively finding and engaging with them. Harness your customer or member data. Pull the intent signals out of the noise. And use intelligent automation to act on that Customer Intelligence—on time and at scale.
The Banking Guide to Life Event Engagement
Market factors can force a shift in business priorities, while individual consumers may have financial needs and goals that don’t align with the predominant trends. Learn how to identify individual life events for contacts in your database, prepare for emergent events, capitalize on time-sensitive opportunities, and provide truly personalized communications to every consumer.
