perspective Does your savings account grow with customers? Derive a win-win proposition with a Smart Saver account Sreenatha Reddy Guthi

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1 perspective Does your savings account grow with customers? Derive a win-win proposition with a Smart Saver account Sreenatha Reddy Guthi

2 Breathing Life Into a Dormant Savings Account Your savings account offering demands attention. On one hand, your customers unwittingly allow money to idle in the account. On the other, your bank pays a price to serve a dormant account. In fact, the savings account can open new revenue streams by mining customers and enhancing the level of transactions. You can deepen the engagement with savings account holders by offering financial services such as healthcare and retirement policies. Automatic sweep-in of surplus funds to fixed deposit Locker discounts Figure 1: Diverse touchpoints of a savings account The savings account is the primary point of contact between your bank and a majority of customers. Today, your customers use mobile and Internet banking to transact via diverse touchpoints. However, you may not have cashed in the revenue streams opened by anytime, anywhere banking. You can cultivate loyalty by offering several financial products and services. Nomination facility SMS alerts Savings account Standing instructions The humble savings account offers pathways to mine customers with the objective of cross-selling and up-selling relevant products, as Figure 1 illustrates. Online banking ATM cash processing Cheque and overdraft facility Mobile banking

3 Savings Account A Random Account Number or Unique Customer Your bank can segment the universe of customers based on their savings accounts and realize the benefits of financial convergence. The savings account can be enhanced with value-added features and embedded into financial products. The opportunity cost of acquiring customers of healthcare and retirement policies is significantly lower than engaging your customers and marketing policies as standalone products. Your bank is well placed to mine customers based on visibility into transactional behavior. This vantage position enables your bank to better understand the unique needs of customers and target them more accurately. Consequently, you can open new revenue streams by embedding multiple financial products into a Smart Saver account. A Smart Saver account is a versatile product and a win-win proposition for the bank as well as the customer. The benefits of this account include: Realizes the potential of customers Reduces the sales effort to market financial services Mines customers at the account opening stage Caters to the financial needs of customers

4 Savings account Childcare account Smart Saver account Healthcare account Retirement account Introducing the Smart Saver Account Smart Saver Account vs. Savings Account Your bank can now upgrade the vanilla savings account to a Smart Saver account and fulfil the twin objectives of mining existing customers and offering a wide range of financial products. The enhanced savings account opens multiple revenue streams at minimal cost and effort for the bank. The Smart Saver account streamlines the process of marketing relevant products to customers. Significantly, it serves as a one-stop financial gateway for customers who can access products and services tailored to meet their specific needs. Smart Saver Account: A Savings Account That Works for Customers A Smart Saver account embeds subaccounts viz., healthcare account, childcare account, retirement account, and the savings account. Smart Saver account holders can retain a fixed amount in the sub-accounts or make periodic payments. The account may stipulate an average quarterly balance to be maintained in the sub-accounts. Each sub-account offers a variable interest rate, which will be calibrated to ensure competitiveness in the financial marketplace. You can utilize the interest accumulated at the end of the year for different purposes: Interest from the healthcare account can be routed to a healthcare policy Interest from the childcare account can provide for a childcare policy Interest from the retirement account can be used for a retirement policy When your Smart Saver customer does not use interest in the sub-accounts for any financial instrument, it can be withdrawn or retained in the account to open policies with added benefits. Variable interest rates increase the net interest rate of a Smart Saver account vis-à-vis vanilla savings accounts. Let us delve deeper into a Smart Saver account and find out how it realizes benefits for your customers: Customer deposits money Savings account Interest accumulated based on a specified interest rate

5 Customer deposits money Figure 3: Vanilla savings account Smart Saver account Healthcare account Childcare account Retirement account Savings account Healthcare policy Childcare policy Retirement policy Interest from savings account Figure 4: How does a Smart Saver account work? Let us assume that a customer with an annual salary of US$75,000 has an average balance of US$1,000 at the end of each month in a vanilla savings account. At a 5% rate of interest, it amounts to a gain of US$600. Account type Amount accumulated Interest rate Amount accrued Savings account US$12,000 5% US$600 On the other hand, your Smart Saver account holder accumulates interest in each sub- account: Account type Amount accumulated Interest rate Amount accrued Healthcare account 6% Interest of US$180 paid as premium for healthcare cover Childcare account 5% Interest of US$150 paid as premium for a child care policy Retirement account 7% Interest of US$210 paid as premium for a retirement policy Savings account 5% Interest of US$150 swept into the Smart Saver account The Smart Saver account holder earns a cumulative interest of US$690 at the rate of 5.75% and benefits from insurance policies to cover financial liabilities.

6 A Smart Solution for the Savings Account Your bank can attract new customers and retain existing customers by blending product innovation with technology. Use customer and transactional data more proactively to better serve customers through the savings account. Cultivate customers by offering the Smart Saver account a highly personalized savings account to meet needs at every stage of life.

7 About the Author Sreenatha Reddy Guthi Technical Lead, Financial Services and Insurance (FSI), Infosys Sreenatha has over eight years of international IT experience in the financial services industry. His areas of specialization include mainframe programming in the insurance and banking domain. Insurance and super annuation are his primary areas of domain expertise. You can connect with him on LinkedIn: or reach out to him at