Speakers: Jaspreet Chawla, Sam Kilmer & David Ladic
0:13 | Sam Kilmer
Well, hello out there. Welcome to our session, reclaiming lost deposits. I’m your host, Sam Kilmer, managing director of cornerstone advisors, contributor to gonzo banker and host of the fintech hustle podcast. I also happen to be a former bank digital and marketing exec, which may come in handy here later if we have to pull any books off the shelf. But it’s good to be with you here as your host. And I’m joined by a couple of fantastic guests to talk about a real issue in the industry, which is deposit outflows and taking charge of reclaiming lost deposits just real quickly. You know, cornerstone advisors, the firm that I represent, we put out quite a bit of research every year and, you know, one of our recent research reports estimated that three trillion dollars in deposits have shifted out of regulated financial institutions, banks and credit unions into fintechs and non traditional providers, a couple trillion of that in fintech investment accounts, and another trillion in fintech savings accounts or challenger type organization savings accounts. And it doesn’t have to be that way is our contention. And so that’s what we’re here to talk about today with a couple of our esteemed guests and I’ll just introduce them. Now, we’ve got Jaspreet Chawla from navy federal, welcome, Jaspreet.
1:36 | Jaspreet Chawla
Good morning, thank you.
1:38 | Sam Kilmer
We have David Ladic, from Zafin, welcome, David. Hey, Sam. Good morning. Thanks for having us, you bet. Yeah, it’s great to be with you. And as I understand it, I mean, just thinking about your backgrounds as we were getting to know each other over the last couple of weeks. I understand Jaspreet that your leadership at Navy Federal has really evolved, you know, from a perspective of deposits, but also how that relates directly to product. Maybe just take a minute or two and tell us a little bit about what it’s like the day in the life of Jaspreet and some of the things that you’re working on at navy federal.
2:19 | Jaspreet Chawla
So, yes, when we started with Zafin, I was leading deposit products, IE, pricing product innovation and the operations around deposit products, right? Three weeks ago, I had shifted into a new role where I am leading the product domain for what we’re calling our cloud core kind of modernization efforts. And from a day in the life of Jaspreet, I’d say right now every day is a little bit different because we’re still kind of, you know, going through the storming and the norming and figuring out our operating models. But the theme is really the same, Sam, right? I’m leading the product domain. And as that my intent is always trying to get connect strategy to execution in a way that translates like the transformation into member value, right? How are we thinking about our product innovation? It’s not just a tech lift that we are doing when we’re going from legacy to cloud core. When we’re thinking about real time banking, what are the implications and what is the value proposition our members will be getting from that? I’d say, you know, it’s a mix of my days full of mix of meetings and steering decisions and a lot of time is spent connecting dots where we’re thinking about like how are we approaching sequencing balancing risk strategy? Keeping the member impact front and center? And then it’s about connecting with people, you know, working through my team, the business because I’m in the kind of the enterprise transformation office now. But right, like there was product leaders, we got to connect with those. We got to hear what members are saying, contact center, branch ops interactions. So, I, you know, hopefully that gives you a glimpse of what my day looks like. It’s about orchestrating clarity, perhaps is another way to think about this.
4:23 | Sam Kilmer
Yeah. And, you know, listen, I don’t want to assume that everybody else knows what David and I obviously understand that navy federal is a really big deal and you guys are out there a lot. But for those, you know, those people that aren’t really out there paying as much of attention to it, maybe they don’t know, I’m just curious what’s your take on how, whether it’s the work that you’ve done or whether it’s just the work that your whole team has done at navy federal. How does navy federal stand out in the market?
4:54 | Jaspreet Chawla
We are the largest credit union we’ll start there, we have.
5:05 | Jaspreet Chawla
Our mission is to support our members wherever they are, right? And to provide exceptional service. Our members truly are the mission. And that is how we look at where we are, where we have branches, where we are providing a 24 seven contact center. A lot of the credit unions look to us for kind of that guidance almost right? We, I think everybody hopefully knows that we serve all of the department of defense, coast, guard, active duty veterans, civilian contractor personnel and their families. We currently serve over 15,000,000 members. And because we’re serving the department of defense and they are everywhere we are worldwide. And I think I also mentioned that we have 24 seven contact centers so that our members can reach us anywhere. So just we are there to support the smaller credit unions. We are there from a credit union lens of being here to serve our members. Does that? Yeah, that.
6:14 | Sam Kilmer
Was excellent. So that’s one senior vice president, Jaspreet, I’ll go to another senior vice president here with David and say, David, you know, listen with your background and we’ve known each other a long time. You’ve been in the industry and you’re in and out of so many institutions all the time. Is this consistent with what you’re hearing from others in the market or, you know, what else are you seeing out there? Yeah?
6:43 | David Ladic
I picked up on a comment, Jaspreet made strategy execution and value, which I think is really strong because that’s what we see in varying size banks, credit unions all the time, right? Everyone’s a little bit different with their strategy maturation, right? Some people know, they’ve got deposit growth, member attrition problems. They know, they’ve got to cross sell more products per customer. They want to drive better value, right? They have trouble executing because everyone has these big systems, these monolithic ecosystems, Sam, right? That you and I have been a part of from core banking to digital to all the 1,000,000 products in between mcifs and CRMS and analytics. Now, everyone’s got a snowflake data lake or moving to some sort of data rationalization plan, right? Let’s get clean data. So everyone’s at different points on that maturity curve. And they’re also at different points on the strategy curve, right? They know they have problems. They understand the big banks are taking their customers and the challenger banks, right? We talk about, you know, the 98 percent on one percent, you’ve got all the challenger banks on the left and one percent you’ve got the big banks on the right? You got the 98 percent of banks and credit unions in the middle, right? The typical product mix, et cetera. How do, how do they create a strategy to execute retention and growth strategies to drive customer member value, right? And that’s where Zafin comes in? So, working with folks like Jaspreet all the time, how do we Modernization their approach to product and pricing? How do we give them the tools to make it easy? Right? I was just with a banker this week and they said we always have to go to it and it’s a challenge and a project. Well, we try to take it out of the picture and make it more banker driven, more outcome driven, right? By those that are executing the strategies to drive the value. So, I love that, I love that sentence, Jaspreet strategy execution and value because it’s a great thread to tie how Zafin sits across an organization and serves people like Jaspreet and others in leadership roles.
8:44 | Sam Kilmer
Yeah, I, you know, it’s good stuff and maybe let’s take a step back for a minute and I’ll not go negative but let’s just at least talk about the problem a little bit that, you know, the reason why we got the three of us together which was, you know, pressures on deposits. I think my colleague Ron shevlin at cornerstone constantly talks about how, you know, primary financial institution, pfi or primary fi, you know, it’s not what it used to be or it’s dead or it’s shifting or it’s changed, you know, that’s one element of it, but I’m just curious, Jaspreet, let’s start with you. What have you been seeing as far as pressures on deposit relationships?
9:31 | Jaspreet Chawla
Say, there’s a few layers to this, right? One is the most obvious one is the macro environment, right? Yes, the fed, lowered rates, but we are pretty much still in a high rate environment to a large extent. If you look back to where we’ve come from, right? And consumers, our members are just more rate sensitive than consumers than they have been over the past, right? Inflation is still high. The cost to go get your groceries is still high. And then add to that layer, there’s competition not just from banks but from fintechs brokerage sweep accounts, and even like direct to direct consumer investment apps that are out there, right? That are making moving money frictionless. I think the, if I had to pinpoint to something that we are really trying actively to solve that we think we can manage is like is the pressure that’s more behavioral, right? And that goes back to like members are diversifying their wallets and this isn’t new. It’s been a trend that we have been observing over a few years now, but it’s become such so frictionless that more are doing it. They’re spreading deposits across different platforms that give them different types of value, whether it’s fintechs, like whether it’s paypal, venmo, a traditional financial institution, right? They’re looking for different types of value depending on the consumer you’re working with, right? Some are looking for better UX, some are looking for faster access to funds, or some are just looking for more personalized insights to help them get financially healthier, right? And so I think that’s those are the pressures and where the challenges lie, it’s just like how do we remain competitive on pricing? Because going back to the macro environment, the rate sensitivity, right? So we’ve got to manage the competitiveness on pricing without losing sight of what the other, what many of the consumers are looking for, which is the experience, the insights and behavioral stuff, right? So it’s not just something that we can fix with pricing anymore. There’s a lot more strategies at play to continue to have that retention and that loyalty from a consumer that’s needed. It’s no longer one single solution. Pricing rates will fix it.
12:12 | Sam Kilmer
Really interesting. David any reactions to that or what are you seeing as far as the pressures? Yeah?
12:20 | David Ladic
Absolutely, Sam, you know, we did a survey earlier this year. We do some survey work as well. And over 50 percent of the people we surveyed have multiple financial relationships, right? So that tells me that banks and credit unions have a huge opportunity within their own customer member base to grow deposits to grow stickiness, right? By offering more relevant products and products, aren’t what they used to be. You know, I would tell you that, you know, a gen Z doesn’t want another five dollar fee waiver, they want a Netflix subscription for three months, right? They want to receive points from their institution, the same way they get points from AmEx, or chase or Citi, right? And so to do that, you have to really look at your customers and your members holistically, you can’t continue to be a siloed, monolithic organization that doesn’t understand that if I have 5,000,000 in wealth, my banking relationship, that might only have 5,000. It treats me that way you have to treat a customer and a member relative to their worth to your organization. And you have to be creative and have the ability to create products and pricing of products across things that are no longer linear to banking. You know, why does Amazon, and why do these companies succeed? They’re looking at your needs outside of selling books, if you’re Amazon, remember that when they were just the bookseller, I can hardly remember, right? So, how do you put in place programs that at the end of the day have a product structure that at the end of the day have pricing or fees or rates or rewards to ultimately drive loyalty. So, helping banks put an infrastructure in that recognizes the customer, the member across the silos, helping them understand how to drive rewards and loyalty based on behaviors that you want to see as an organization, right? That are most profitable and beneficial is critical to enabling institutions to grow their customer member base, to grow their deposit base to create stickiness, and ultimately drive brand loyalty to the point where institutions are going to need to be, you know, to survive against, you know, the one percent of challengers and the one percent of the big banks. Yeah. Well.
14:41 | Sam Kilmer
Jaspreet and good point, David, good points. I should say Jaspreet, you mentioned, you know, well, certainly we have our rates have to be competitive. So, there’s sort of table stakes and rate arbitrage and all that. But increasingly that’s not going to solve the problem. I’m curious, what have you found or are finding in your testing and learning is helping to solve the challenge and maybe federal anyway to.
15:09 | Jaspreet Chawla
Piggyback off what David was talking about like specifically with gen Zs. And I think David, you threw in the millennials as well, if I’m remembering correctly. But, right, like to them, loyalty is very different now, right? It’s no longer like a static choice. It’s dynamic based on what they’re looking for from a value perspective. So, we have been doing a lot of tests and learns in relationship pricing space, right? In personalization, providing nudges personalized insights to members to kind of show how we are using their data to really get them towards their goals and showing up as a trusted partner. And I think that’s the reason why we’re going down this modernizing our foundation pathway, right? Which is, which is in my new role that’s what I’m supporting, we are shifting our products and pricing out of the core through Zafin, so we can be more dynamic and responsive. All the things that David was talking about without creating a lot of operational complexity, right? So that way we have the flexibility to compete based on the value a member wants or is looking for from a product, right? If they’re looking for the greatest rate, okay? We’ll optimize the product offering based on great, because we know that’s what they value if they’re looking for flexibility, having modular product builds, not just, you know, you set a product and you forget it for the entire term of the relationship, allows us that flexibility, right? You’re looking for flexibility. We’ll give you flexibility. It may not come with XYZ though, right? So, we are trying to be more thoughtful and that’s what we’ve learned members value different things. How do we change our offerings to align with what they value versus saying this product comes with, this product comes with this. No, we’re going to have your intent in mind as we create or co create our products with you.
17:21 | David Ladic
It’s really a member. It’s a member of one concept. Sam. Yes, it’s how do we make every member at Navy feel like they’re valued for who they are? And how do we get the insight and analytics around them to really understand what they value, right? And how do we create the right products and services… not only from a product and services level but from a meet the member where they are? You know, I would say Jaspreet, that your members in San Diego are in a different competitive rate environment than your members in DC, correct? And also different difference down than your members in Florida. So, how do we put just at a simple nature, how do we put the right rate in front of the right member in the right place? That should be table stakes very complex though, Sam, as you know, for banks to do today? Because they don’t have the infrastructure to do it based on the legacy infrastructure, which I think Jaspreet is part and parcel why product and pricing is so important to navy as you Modernization not only your core infrastructure but the way you have member engagement solutions, you manage the end to end value lifecycle of the member, et cetera. You have to have that capability to survive. In my opinion.
18:26 | Jaspreet Chawla
Right. It is, how do we provide personalization at scale? And I think that’s why we are leaning into Zafin because it gives us that capability. We can use our data, AI, start anticipating member needs, and then now even act by switching to this platform that allows for modular builds, more personalization and like surfacing exactly what you’re looking for and allowing you to build your own product.
18:58 | Sam Kilmer
Yeah. You know, it’s interesting. One of my colleagues, Tristan green did some research on this and looked at, you know, credit unions and banks throughout the country that had grown deposits kind of well, regularly. Let’s just say that they did it over several quarters consistently would be the word I would use. And what I thought was interesting was there were three traits that came out of it and we tend to think about digital delivery and those kinds of things which is all great. But two of the attributes really came down to product line. You know, what was in their arsenal, product wise. One of those things actually did have to do with delivery. It was about, you know, did they have a, I think you said Jaspreet kind of a frictionless process of opening an account, let’s say. But then there was also things like how competitive was your lead product? And whether that was on the business side or on the consumer side. So, I think it’s interesting that this battle has really shifted into product competitiveness and just being able to get people, you know, like your point about personalization, Jaspreet, of reaching someone out, you know, aggressively reaching out to people and hitting them with something that’s gonna an attention getter that’s gonna have value to them. I was just curious because we’ve covered a lot and we don’t have a lot of time, but we’ve covered a lot of ground. If there was sort of one thing that you would point out to your peers out there in the market, if there was one way, if there’s one thing you would have them look at to stabilize their deposits or reclaim their deposits. Where would you point? Where would you say start first? Jaspreet?
20:53 | Jaspreet Chawla
I’m gonna say, look at the data and start with like clarity, right? Clarity on what makes your deposits valuable to our members. Why are they banking with us? Not just for our balance sheet, right? Don’t, just launch a promotion because you think that’s a temporary, those are temporary levers, right? Is the real differentiator to focus in on and is to get clarity on is like understanding who your members are, who are the ones who are leaving, what moments matter to them and how our products fit into their daily lives, because that’s what’s going to resonate with them and that’s what’s going to make them stay with the institution and keep their deposits there.
21:48 | Sam Kilmer
Excellent, David. What do you think? Yeah.
21:51 | David Ladic
I would say, you know, personalization and hyper personalization is critical at a foundation table stakes perspective. I think your comment was absolutely accurate. The glass of digital. You guys said this in your 20 25 state of the industry. And back in January, Sam, always remember the glass is table stakes. It’s what you do behind the table. It’s behind the glass. It’s the insights, it’s the way you drive those experiences, right? By understanding your customers and creating the right products to meet your customers and members where they stand. I think if banks and credit unions can get a handle on their data, which most are going towards some faster than others, that gives them the foundation implement the right tooling and technologies to enable this. Don’t sit with an operations and back office staff and reports and monthly, you know, the concept of monthly analytics has got to die. It’s daily. It’s real time analytics, right? Put that data in people’s hands, give them the tools creative people like Jaspreet and her peers at navy to create the right products and meet their members where they are with the right tooling. Then you really build a foundation for deposit growth for deepening share of wallet, for customer and member intimacy and loyalty, which really what it’s all about.
23:11 | Jaspreet Chawla
If I may also just, you know, do the end tagline there, right? You got to build products that earn trust in like real time almost, right? And then the rest will just organically follow the growth, the loyalty, the deposits… don’t start with just the rate sheet anymore?
23:32 | Sam Kilmer
Right. So, begone… rate sheets, we’re looking at data. We’re looking at personalization, we’re looking at strong product offers that show that you’re listening that you’re paying attention and that you care good stuff. And I just very appreciative that I had the chance to chat with you guys and that we hit the record button. I want to say big, thanks Jaspreet Chawla from Navy Federal, David Ladic, from Zafin, for sharing your experiences. I would just say for those of you out there listening, keep an eye on navy federal, check them out, check it, see what types of offers and offerings they have, check them out on social media, social engagement, see how they’re engaging because I’ve always found it to be really interesting. A couple other resources. I mentioned Tristan green. He wrote a little bit about this over at gonzo banker the research that David, you pointed out. But also I mentioned earlier from Ron Shevin and Elizabeth Goudreau at cornerstone that you can check out. And then also there’s a, an article if I may called getting high value growth in a hyper competitive market over at the Zafin blog that David and team were gracious enough to have me add to. So thanks for joining us today, you guys and we’ll see you out there on the road.
24:50 | David Ladic
Thanks, Sam. Thanks Jaspreet.
