Pinwheel's Power of Primacy Report Finds Banks Fail to Achieve Account Primacy by Wasting Resources on Account-Opening Incentives

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Mar 15, 2024, 10:51 ET

NEW YORK, March 15, 2024 /PRNewswire/ -- Pinwheel, the fintech helping banks win primacy by making direct deposit switching easy, unveils The Power of Primacy in Banking research report in partnership the Digital Banking Report. To learn about banks' customer acquisition strategies, Pinwheel and the Digital Banking Report surveyed 200 bank and credit union executives with over $500 million in deposits. Pinwheel also polled consumers to understand if their bank switching behavior matches up with the acquisition strategies employed by banks.

These pieces of research help banks better define, measure, and achieve primacy. The main takeaway from these findings is that banks' lofty account opening incentive campaigns aren't yielding quality accounts because banks are missing the mark on. For example, 40% of newly opened accounts are never activated largely because of customer frustration with the current direct deposit switching process.

New customer acquisition is the top priority for banks today since it's one of the best ways to recover deposit growth after 2023's tumultuous economic year. 2023 was marked by the collapse of Silicon Valley Bank and a primary outward flow of bank deposits as consumers hyper-focused on finding the best rates and services available as they struggled to make ends meet.

For decades, banks' go-to playbook for driving new account holders has been to offer outlandish incentives. While it often appears successful, upon further inspection, it's clear to banks that an initial influx of sign-ups aren't a sign of success. For example, a major national bank ran an account opening campaign that drove 5,000 new customers to open accounts, but they realized those new accounts averaged a paltry $137 balance while costing $412 each to acquire through digital advertising and promotions.

"Banks are wasting their resources on account opening incentives because 56% of consumers say finding better products and services at a different bank has made them consider switching. Only 39% say account opening incentives made them consider switching banks, and banking executives consistently report a 40% never active rate on these new accounts," said Jim Marous Jim Marous owner and CEO of the Digital Banking Report. "This depicts a dire problem for financial institutions when you consider acquisition initiatives are getting the lion's share of investment while branch and digital experience initiatives are sparsely funded."

Bank executives stated that their top two innovation agenda priorities are improving the digital experience and being viewed as the primary financial institution by customers. However, the allocation of investment dollars toward acquisition incentives continues to be a destructive paradox.

"Banks are committed to experience innovation but overlook the friction-filled direct deposit switch experience that directly prevents them from achieving their growth goals. By failing to deploy technology to solve this activation issue, banks are missing out on the customers they are trying to attract" said Kurtis Lin, CEO, Pinwheel. "Over 80% of high earners making 150K or more that we surveyed stated they would switch banks if they could digitally transfer their direct deposit in seconds."

To read and download detailed findings from The Power of Primacy report please visit this link.

About Pinwheel
Pinwheel helps banks win primacy by making switching direct deposits easy. Through exclusive and first-of-its-kind partnerships with payroll providers, Pinwheel can instantly authenticate consumers without credentials. This new product provides best-in-class conversion, greater security, better insights, and a seamless UX for switching direct deposits at the world's leading financial institutions. Pinwheel's platform has enterprise-grade security protocols to power connections to over 1,800 platforms (covering up to 100% of US workers paid via direct deposit) and over 1.5 million employers. From that point of connectivity, leading fintechs and financial institutions (such as Block's Cash App, Citizens Bank, Acorns, Credit Karma, and more) leverage us to power direct deposit switching, earned wage access, income & employment verification, and build innovative new products. Pinwheel is trusted and funded with $77M by top-tier investors such as GGV, Coatue, First Round Capital, and more.

About the Digital Banking Report
The Digital Banking Report provides the largest collection of free, in-depth insight into how data, digital technologies innovation and an expanding competitive ecosystem are changing the banking industry. Banking and credit union executives and solution providers at more than 10,000 companies worldwide use insights from the Digital Banking Report to keep pace with digital transformation in financial services. The Digital Banking Report is owned and curated by Jim Marous, recognized as one of the most influential people in banking and a top 5 global influencer. Jim Marous is also the co-publisher of The Financial Brand and host of the Banking Transformed podcast.

SOURCE Pinwheel