Banks are getting creative in their efforts to attract and maintain deposits as competition ramps up and funding pressures intensify.
Incentivizing employees with attractive bonuses tied to deposit growth is one way some banks are ensuring they maintain their deposit base in order to fund loan growth.
In one example, Berkshire Hills Bancorp Inc. employees can receive monetary rewards based on a scorecard that scores bankers on metrics on service quality, deposit retention and net promoter scores, which measure how likely a customer is to refer the company to friends and family, COO Sean Gray said in an interview.
The company is hoping the incentive will encourage its bankers to focus on serving small business and business banking clients because those clients tend to hold larger deposit balances than loan balances, Gray said.
"Their scorecards have a real emphasis on making sure that the funding of their overall business and those customers are being taken care of from a technology and a service perspective," Gray said.
The Boston-based company is focused on attracting deposits so it does not have to rely on wholesale funding to keep up with loan demand, Kevin Conn, senior vice president of investor relations and corporate development, said in another interview.
"We don't want wholesale funding to be too big, so we do want to try to keep that a manageable number," Conn said.
Origin Bancorp Inc. is also using employee incentives to generate deposit growth, given the company's expectations for loan growth to exceed deposit growth in 2023, executives said during an investor earnings presentation in January. The company has increased its incentive plan for deposits so they will now be incented at a higher level than loans, Origin Bank President and CEO Martin Hall said on the call.
Ontario, Calif.-based CVB Financial Corp. has also updated its employee incentive structure such that employees will now earn three times what they earn on loans when bringing in deposits.
"We sort of reallocated the focus to deposits," President and CEO David Brager said during the company's quarterly earnings call in January. "That should help drive some additional opportunities for us as well."
Separately, Knoxville, Tenn.-based SmartFinancial Inc. is relying on its regional presidents across its Tennessee, Alabama and Florida footprint to drive deposit growth.
"We build that into their regional budgets [and] into their regional incentive plans and really have tackled the deposit generation that way," President and CEO Billy Carroll said in an interview. "That's worked really well for us."
SmartFinancial shifted to this structure after the pandemic-era flood of deposits due to government stimulus. Before that, the company created a chief banking and deposit officer role to focus on deposit growth. In the interview, Carroll said SmartFinancial will continue to lean on its regional presidents to drive deposit growth in the current environment, rather than reinstating the deposit officer position.
In addition to its employee incentives, Berkshire Hills is implementing some new technology-based strategies that it hopes will help it to outpace peer deposit growth. The company recently implemented a virtual concierge banking app for customers, which will help retain deposits as it consolidates branches, Conn said in the interview.
Additionally, Berkshire Hills entered a partnership in 2022 with the technology firm Narmi Inc. With Narmi's technology, Berkshire has reduced the time to open an account to 2.5 minutes compared to 10 minutes in the past — another factor it hopes will set the company apart from peers, Conn said.