Profitable Customer Acquisition for Banks and Credit Unions. Traditional marketing strategies are ineffective and inefficient resulting in significant missed opportunities for Community Banks and Credit Unions. OptiRate offers a unique approach that enables Banks & Credit Unions to attract profitable customers at a fraction of their current customer acquisition costs.

1. Profitable Customer Acquisition
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2. Does your Bank need to do any of the following?
Ø Grow the number of customers who have more than just
2-3 products?
Ø Improve asset growth?
Ø Improve profitability?
Ø Grow your footprint without spending millions on adding
new branches and staff?
Ø Reduce marketing costs or make your marketing spend
much more efficient?
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3. All of these imperatives are highly correlated to the
size and quality of your Bank’s customer base
Asset Yield
NII Assets
COF
Deposits
Service Fee
Profit Net Fee Customers
Income
Service Cost
# Services
Staff
Operating Distribution
Expenses Channels
Regulatory
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4. But traditional customer acquisition strategies are
prohibitively expensive and fail to generate the
needed volumes
$200+ CPA
5 Purchases
10,000 emails
$500 - $750 CPA
2 Customers
5,000 ad impressions
$300 - $600 CPA
25 – 50 responses
10,000 DM pieces $1,000+ CPA
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5. The high cost of Marketing initiatives is shocking –
especially given the opaqueness of the quality of the
acquired customer
Advertising Costs – Savings, CDs Advertising Costs – DDAs
Advertising costs as percent of new funds Advertising costs as percent of new funds
32 of the 50 largest Retail Banks 32 of the 50 largest Retail Banks
1st Quardrant 0.25% 1.92%
2d Quardrant 0.44% 5.00%
3rd Quardrant 0.88% 33.00%
Bottom Quadrant 5.56% 286.00%
By comparison, the average 12mo CD rate is 0.40%
Source: Banks’ New ROA – Return on Advertising, Aite Group, March 2009
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6. The QUALITY of customer acquisition programs is far
from assured, despite the high cost and risk
Destroy
80%+
of Customer 130%
Base
Profit
Earn
10% - 20%
of Customer 230%
Base
Profit
Source: Jack Henry December 2012, Customer Profitability Distribution
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7. It doesn’t take much to have a large impact –
Just a 5% change in customer base can move
profitability by nearly 40%
20% of
160% customer base
140%
80% of
customer base
40%
120%
Gain
Profitability
100%
37%
80%
loss
60%
40%
20%
0%
Baseline 5% decrease in 5% increase in
profitable profitable
customer base customer base
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8. Q: What are the best tactics to grow the 20% of
customer base that is capable of driving growth &
profitability?
• All Consumers are
SHOPPERS, and All
Retail Banking
Products are
Marketed based on
Price
• Price is the KEY factor
for customer acquisition
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9. Loans are an attractive first product sale, but
competition is fierce and growth is non-scalable
Loans
• Intense competition
• Pricing / terms dictate
wins
Competition • Too much $ chasing to
few deals
• Larger competitors
“buying” deals
• Difficult to reach target
customer
• Time consuming
Customer • One-at-a-time effort
Segmentation • Prospecting “in the
dark”
• Very high acquisition
cost
• Lack of required quality
ROI and quantity of leads
• Requires experienced
loan officers
• (mostly) Strong ROI
• Likely cross-sell
opportunities
Cross-Sell
Opportunities
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10. Checking Accounts offer limited opportunity to
engage with the right customer on the right terms
Loans Checking Accounts
• Intense competition • Highly competitive
• Pricing / terms dictate • Commoditized Product
wins • Pricing (fees,
Competition • Too much $ chasing to incentives) wins
few deals • ‘Me too’ offerings
• Larger competitors
“buying” deals
• Difficult to reach target • Segmentation difficult
customer • Offering unattractive to
• Time consuming most profitable
Customer • One-at-a-time effort customer demographic
Segmentation • Prospecting “in the segments
dark”
• Very high acquisition cost • High Acquisition Cost
• Lack of required quality • Mostly unprofitable
and quantity of leads customer segment
ROI • Requires experienced • Negative ROI
loan officers
• (mostly) Strong ROI
• Likely cross-sell • Customers likely to be
opportunities open to cross-sell
Cross-Sell message
• But most will not
Opportunities want / need additional
services
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11. Most Checking Accounts generate non-recoverable
operating losses
Average DDA Revenue DDA Revenue and Costs by Account Balance
2 Profiles of
$800 60%
Profitable Customers
$7 $30
$25 50%
$600
Average Revenue
% Customers
75%+ Customers Generate 40%
per Account
$138 Operating Loses
$16 $400 30%
After $20 reduction Average Checking Account Costs
related to Durbin
20%
$120 $200
After $30 reduction 10%
related to Reg E Opt-In
$0 0%
Fee ge d me eg nt
OD han prea nco mR ccou
NSF < $500 $500 - $1,000 - >$3,000
terc erest S ther I ear-Ter king A Transactors $1,000 $3,000
it In Int O :N c
Deb Less Che
Avg Average Account Balance
Revenue % Customers
Source: Affinion Source:
Revenue: Top Trends in Retail Banking by Celent
% Customers: Action Marketing Webinar “The future of Checking – Fee or Free?”
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12. Few consumers switch Banks; switchers are more
selective and exhibit limited loyalty
Customer Acquisition Retention / Wallet-Share
8.7% Consumers who
switched their primary 43% Customers who
purchased additional
Bank in 2010 banking products from
their primary Bank
1.9 Number of Banks
considered during a 63% Banks that experienced
greater price sensitivity
switching process in from their customer
2010 base
Banks reporting
8 - 12 Number of Banking
providers used by a 59% decreased customer
typical consumer loyalty / more
“shopping around”
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13. CDs provide for easy differentiation to attract the
most profitable customer segment
Loans Checking Accounts CDs
• Intense competition • Highly competitive • Limited competition
• Pricing / terms dictate • Commoditized Product • Commoditized Product,
wins • Pricing (fees, but can be highly
Competition • Too much $ chasing to incentives) wins customized
few deals • ‘Me too’ offerings • Pricing wins
• Larger competitors
“buying” deals
• Difficult to reach target • Segmentation difficult • Ease of targeting most
customer • Offering unattractive to profitable customers
• Time consuming most profitable • Ability to target
Customer • One-at-a-time effort customer demographic consumers in selected
Segmentation • Prospecting “in the segments geographies
dark”
• Very high acquisition cost • High Acquisition Cost • Low acquisition cost
• Lack of required quality • Mostly unprofitable • Strong ROI assuming
and quantity of leads customer segment aggressive cross-sell
ROI • Requires experienced • Negative ROI effort
loan officers
• (mostly) Strong ROI
• Likely cross-sell • Customers likely to be • Customers likely to be
opportunities open to cross-sell capable of supporting
Cross-Sell message additional products &
• But most will not services
Opportunities want / need additional • Requires a structured
services & aggressive cross-sell
effort
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14. What if there was a risk-free, performance-based
solution that delivers the RIGHT consumer segment
to bankers?
FI Needs Consumers Want
ü Attractive
ü Grow Affluent
Rates
Customers ü Screens HNW customers via
large high(er)-yield CD deposit
ü Increase ü Real-time
profitability account open
ü Pays for all marketing &
ü Build customer transaction costs
ü Safe & Sound
base in new FIs
territories ü Provides a turn-key solution
ü Decrease ü Unbiased
ü Real-time campaign
marketing costs advice
management
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15. FIs are positioned to focus on valued-added cross-
sell activities with consumers most likely to respond
to the offers
OptiRate is your “virtual” branch that does not stop
delivering results
ENGAGE Your Bank’s WOW!
Prospective Customers Relationship Management
ACQUIRE
Affluent Customers
IMPROVE
Profitability Through NII And
Cross-Sale
EXPAND
Into New Markets Before
Developing Branches
COMPETE
Effectively Against Other
Financial Institutions
SLASH Enabling your Bank to refocus its efforts on cross-
Marketing Expenses
sell of customer base that is highly likely to be
receptive.
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16. Consumers have unbiased ability to identify Banks &
Credit Unions that value their business
High-yielding CDs Simple & intuitive UI
Safe & Sound Content to attract and
Financial Institutions inform consumers
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17. OptiRate-referred customer base is more cross-sell
friendly and thus more profitable with 50%-80%
lower customer acquisition cost
FI Benchmark OptiRate
Customer Acquisition Customer Acquisition FI
Cost Cost Savings
Branch
$328 $70 $258
Customer Acquisition
Online
$143 $70 $73
Customer Acquisition
Source: Online and branch acquisition costs: Brintech, Cass Bettinger & Associates and Amalfi Consulting, WIB Newsletter,
November 2009
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18. Return on investment is achieved one the transaction
$1,400,000
Just 1,000 new 6% Asset Yield
Customer
$1,200,000
relationships can yield
Incremental Net Revenue
$400k - $800k 5% Asset Yield
annually
$1,000,000
4% Asset Yield
$800,000
$600,000
$400,000
$200,000
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Number of Customers
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19. Next Steps
Getting started is simple & fast… We offer
Simple
New Affluent
agreement 1,000+ Customers
No
Incremental net
long-term $500,000+ revenue
commitments
4 week go-live
with limited IT $20 Million+Improved liquidity
resources
Campaign $$$ Millions Convert into
funding
wholesale
management PROFITABLE
@ ~1hr / mo customer
relationships
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20. Affluent Customer Acquisition
Serge Milman
Serge.Milman@OptiRate.com
415.260.3403 (c)
www.OptiRate.com/Banks | http://BankBlog.OptiRate.com 800.319.6784 x600 (o)
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21. About Optirate
Leadership Team Partners
Robbie Vann-Adibé, Chairman
Serge Milman, Founder / CEO
Associations
Kay Nichols, Advisor
ç
EVP, FIS Global
Bryce Miller, Advisor
ç
SVP, Community Bank
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