The Financial Services Growth Engine Playbook

The Financial Services Growth Opportunity

For decades, banks have accepted the idea that most of their profits come from only a small percentage of customers. But what if you could flip that script?

A strategy focused on these three KPIs will increase engagement and loyalty and drive long-term growth. And while these metrics are not new, achieving results requires a targeted approach and some new strategies to get there.

This playbook is your guide to implementing strategies to look beyond new deposits to maximize the lifetime value of each new account and build lasting customer relationships that increase profitability.

We'll share strategies that drive results and illustrate how the integration of multiple financial services tools can turn accounts into growth engines by:

Ready to move beyond acquisition and build a financial services growth engine? Let's dive in.

The digital banking market is projected to be worth $26.5 billion by 2032, and the majority of bank account holders (63%) have been using their smartphones and tablets for years. But the major players in this market continue to be digital banking brands with traditional banks working to catch up. It's why so many are choosing to partner with leading digital issuance providers.

Achieving maximum digital capability is just the start; after that, banks should focus on making interactions intelligent and eventually autonomous. A digital mindset isn't just about offering online banking; it's about reimagining how financial services are delivered.

SoFi Tech Solutions' research, in partnership with Datos Insights, shows that 60% of consumers prefer digital-first interactions. But many banks have not made enough of their services digitally available. And many transactions can't be done within a single app, or without a lot of friction and toggling between interfaces.

Connecting customers to a bank's digital ecosystem more quickly helps banks serve their customers better by being available when and where customers need them most. There are multiple opportunities to get customers integrated into your ecosystem to drive more value, but slow or clunky interactions can derail the entire customer experience. Prioritizing seamless digital experiences is essential to keeping good customers engaged and coming back.

To put customers at the center of the digital banking experience, banks should focus on intelligent and autonomous interactions. This means balancing self-service with bank support, tailored to individual preferences (based on interactions), rather than on bank processes. By using data analytics and AI, banks can offer personalized experiences and streamline processes while maintaining a human touch. This approach requires ongoing adaptation to customer needs and market demand.

Plugging Into a Digital Banking Backbone

The median cost of digital customer acquisition is 44% lower than non-digital customer acquisition, but many big banks are still not acquiring enough of their customers through digital channels. And we know that the higher the cost of acquisition, the more you must monetize each customer.

Connecting customers with your ecosystem to get them to activate their accounts and move money easily is about creating frictionless experiences that anticipate customer needs. Today, financial institutions and fintechs have multiple opportunities to integrate customers into their ecosystems, driving more value by providing:

Engaging Customers Immediately in Bank Ecosystems

Going digital is only the first step in making customers valuable. Digital-forward banks are measuring growth by looking at customer interactions – rather than just customer accounts – to create a path for long-term loyalty and new revenue streams.

To encourage fast and frequent engagement, financial providers should ensure the digital onboarding and activation processes occur almost simultaneously, minimizing delays between account opening and money movement (while still protecting against fraud – more on that in a minute). By meeting customers where they already interact—primarily through mobile and digital channels – banks increase customer interactions that lead to long-term account use and status as primary provider.

Virtual cards deliver here by establishing new habits and loyalty well before a physical card arrives in the mail. Based on SoFi Tech Solutions client data, enabling a virtual card:

Deliver Instant, Secure Access with Push Provisioning—and Create Customer Stickiness

Push provisioning is an essential next step to make digital card use as seamless as possible. Rather than manually entering card information or uploading a card image, customers can simply tap a button to "push" the card into their digital wallet.

By eliminating cumbersome manual input, push provisioning enables customers to instantly access their accounts using their mobile wallets so they can start using the card immediately, which also boosts top-of-wallet status.

Customers across all generations are curating their own suite of financial services through multiple providers because banks haven't been making services available when and where they need them. Gen Z and younger millennials are leading this strategy: on average, they use more than six financial tools or services. And they are using more than half of these tools outside of their primary FI.

Banks may be underestimating the magnitude of this threat by clinging to outdated metrics that prioritize the number of accounts over the quality and diversity of customer interactions across products and services.

But switching banks is still hard, and banks still have time to re-activate customers who are using many other financial service providers (and be assured that they are) by engaging with customers at their points of need.

To bridge this critical gap, banks can deliver highly curated, contextually relevant offers and services precisely at the point of need. This requires:

Banks and fintechs can't afford to waste time and money offering products that customers don't want or need in that moment. More importantly, banks that can't recognize a customer's immediate need miss a big opportunity to meet it before a competitor does.

Putting your data to work for you and your customers is the only way to put your FI at the point of need. Data from Accenture says 91% of consumers are more likely to shop with brands that provide offers and recommendations that are relevant to them.

Another feature that significantly boosts long-term engagement is direct deposit, which increases lifetime customer value due to driving more transaction volume - more than 50% per account, on average - and sustained use. But switching direct deposit sources can be a friction point for customers.

Solutions like SoFi Tech Solutions Direct Deposit Switch allow customers to update their payroll and direct deposit information as part of your onboarding process. It can also be used beyond onboarding, giving customers the ability to easily update or modify payroll information at any time via your banking app or portal without the pitfalls of outdated, manual processes.

This increases customer engagement and spend, as accounts with direct deposit have around a 10x lifetime value over accounts without direct deposit. It's also been shown to provide a roughly 50% increase in direct deposit adoption over conventional methods.

More importantly, revenues are realized more quickly when you combine the power of multiple features. For instance, independent features that increase direct deposit engagement (such as Direct Deposit Switch, 2 Day Early Paycheck and rewards) are key to boosting customer lifetime value. And when used together, these features encourage a 20-50% uptake in direct deposits.

"For financial institutions and fintech firms, a steady deposit stream is key to account profitability. Digitizing and automating this process presents enormous financial opportunities. Clients leveraging payroll connectivity features like direct deposit switch have seen as high as a 3-4X lift on direct deposit acquisition when benchmarked to other solutions."

Atomic Financial

Empowering customers with flexible financial tools drives engagement and loyalty, increasing transaction volume. Putting customers in control of their finances, including the ability to build a stronger financial future, is about finding products and services that fit their needs and lifestyles.

BNPL is just one great example. It is an increasingly popular alternative to credit cards and adoption is surging. More than one in five U.S. consumers have used BNPL and most users (60%) took out multiple simultaneous BNPL loans. BNPL solutions also align with a rising number of consumers who want to link BNPL with their existing accounts.

Flexibility, access and choice are driving BNPL adoption, and this presents an opportunity for providers to leverage network payment rails (Mastercard, Visa) to provide installment options for customers seeking flexible payment options. As a bonus, banks can add a credit reporting feature to offer credit building opportunities for customers who make payments on time—another way to extend their buying power.

BNPL is No Longer a Pre-Purchase Decision

Post-purchase Buy Now, Pay Later (BNPL) solutions are another key differentiator for banks and fintechs. By integrating a flexible and transparent financing model into their debit and credit programs, these organizations can add significant value to their offerings.

This not only enhances customer satisfaction but also provides a competitive edge in a crowded market.

Moreover, post-purchase BNPL offers fintechs a streamlined entry point into the lending space, allowing them to expand their services beyond traditional deposit accounts.

The benefits of post-purchase BNPL extend beyond market differentiation and business expansion as it also drives incremental revenue through installment fees. Perhaps most importantly, it democratizes financial access by extending financing options to debit customers, which were previously limited to credit accounts.

The Power of Early Pay: Help Customers Build Financial Stability and Freedom

Financial uncertainty impacts more than a third of U.S. households. In fact, data shows that 37% of U.S. adults can't cover a $400 emergency. Getting early access to pay is more important than ever to cover both everyday and unexpected expenses and can mean the difference between paying bills or expenses on time or taking out payday loans and overdrawing accounts.

SoFi Tech Solutions' early access feature allows a bank's direct deposit customers to access their pay when employers deposit wages into their accounts, typically up to two days before the scheduled payday. Early pay also makes a bank's direct deposit feature more attractive, and it's shown that direct deposit is one of the top factors in account primacy.

The ability to access funds earlier can also increase account use, drive adoption of other revenue-generating programs, and boost card spend, all of which add to the overall customer lifetime value.

Early Pay also encourages sticky relationships. Fast access to pay puts your customers in control of their finances, which builds brand affinity and encourages account use.

Simplifying Secured Credit with Dynamic Funding

Traditional secured credit models have long been plagued with complexities around where consumers want to use their funds. Customers face the dilemma of keeping their cash in their demand deposit account (DDA) for use with their debit card or in their collateral account to use as secured credit. The behavior of dividing these funds creates unnecessary friction and puts consumers at a disadvantage throughout their credit-building journey.

SoFi Tech Solutions Secured Credit with Dynamic Funding resolves those complexities. By automating the movement of funds between accounts, customers are empowered to manage all their money in one single account that powers both debit and credit transactions. It eliminates the need for customers to make manual transfers between collateral and DDA accounts when the need arises to make larger purchases.

With this solution, cardholders can manage one "available to spend" balance, streamlining the process and ensuring real-time updates of transactions.

Dynamic Funding offers flexible, secured credit with debit to underserved consumers, helping them build credit and save without the typical friction. With this solution, financial institutions, fintechs and other businesses can provide a user-friendly experience that empowers consumers to manage their finances in real-time.

To support a good digital customer experience, customer needs should be anticipated, not reacted to. This includes everything from opening new accounts and adopting new services to meet needs as they evolve, to the fraud and risk solutions that protect customer accounts and transactions. Taking a holistic approach to managing the CX – from activation to growth – is essential for long-term success.

SoFi Tech Solutions' research shows that 96% of surveyed consumers cited security as the top reason for choosing a banking provider. Of course, security takes many shapes, but a compromised account or unnecessary chargeback friction is a surefire way to bring spending to a screeching halt. Similarly, incorrectly declining legitimate cardholder transactions can result in customer frustration or, worse, over time, customer loss.

Defending your banking, fintech and payments programs from card-present and card-not-present fraud by applying the right mix of fraud protection strategies protects your customers and your bottom line.

Whether it's mitigating fraud losses or reducing false positives, you should have the right tools in place to prevent financial fraud, stay compliant and deliver friction-right transaction experiences for customers. All financial institutions should adopt solutions that incorporate enhanced identity verification and technology that helps your team spot fraud patterns in real-time to reduce cardholder disputes and keep good customers active.

Taking Robust Security, Risk and Fraud Management Measures

As digital transactions surge, fintechs and financial institutions face increasing fraud threats, with 63% of financial firms reporting rising fraud and digital channels contributing to half of losses.

Verifying account and ownership is a crucial part of the financial transaction process, guaranteeing that funds are transferred between legitimate accounts by authorized parties.

To address this, advanced real-time fraud detection and risk management are essential.

Banks should ensure their fraud and risk management solutions can deliver real-time account verification, supported by AI and machine learning models that quickly assess risks in real-time to ensure only authorized transactions are approved.

Doing so supports transactions with the right level of friction to maintain a good, secure experience for legitimate customers.

Banks and fintechs need comprehensive fraud-mitigation strategies that help their fraud teams configure risk rules to block fraudulent events in real time, but also learn over time by analyzing post-transaction data, including fraud and disputes.

Relying on a real-time decision rules engine to monitor and analyze fraud allows FIs to systematically adapt fraud strategies to continuously learn how to block risky transactions.

Whether measuring customer transaction behavior, or configuring fraud rules and transaction risk scoring, the ability to visualize and link fraudulent transactions and behaviors in your ecosystem is critical to enhancing your fraud rule performance.

Integrating a scalable risk management platform that has these capabilities allows banks to make real-time, tailored fraud prevention decisions, enhancing security while maintaining a seamless user experience.

Maximizing account activation and funding is the not-so-secret sauce to driving spend and financial growth for any payments or banking program.

Optimizing banking and payment programs is not just a strategic advantage but a necessity for financial institutions and fintechs alike. By integrating multiple financial services tools, such as virtual and digital cards, secured credit programs, Buy Now, Pay Later (BNPL) options, and advanced anti-fraud measures, financial organizations can transform their customer acquisition and activation strategies to drive loyalty and ultimately revenue.

Building on the key strategies outlined above, banks and fintechs should consider the following actions to accelerate their growth plans.