The Financial Brand Insights - Winter 2023

Top 5 Life Events to Bank On

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Business Life Events • New-to-world business • New ownership or management

FILING FOR A NEW BUSINESS The average new business maintains a checking balance that ranges from $10,000 to $20,000 and is five times more likely (according to Deluxe analytics) than a more mature business to engage with direct-response bank marketing. The U.S. Census Bureau reports that 5.1 million new business applications were filed in 2022 and that pace seems to be continuing in 2023. This shows that the post-COVID spike of startups may have softened somewhat (down from a record of 5.4 million in 2021), but it continues to set records, far exceeding pre-pandemic levels. Key products and services for banks and credit unions to focus on:

MOVING Despite rising interest rates, Americans continue to be on the move. Many thought high rates would cause the home market to plummet but it’s proved more resilient than expected so far in 2023. Whether relocating for a new job, new lifestyle, new climate or simply a new address, the U.S. Census Bureau reports that 10% of households move each year. More importantly, this group is more than twice as likely (according to Deluxe analytics) to change primary banks than non-movers. This presents a real opportunity for banks and credit unions that — with access to timely data — can get a leg up on incumbent and legacy financial institutions. Even more important, though, is the risk to your existing portfolio by not watching these kinds of triggers. It’s a lucrative segment: new movers are more likely than any other life event group to open a new credit card and apply for an auto loan. Key products and services for banks and credit unions to focus on: • Checking accounts • Credit cards • Auto loans

HAVING A BABY Newborn babies are quite small, but they can have a sizeable impact on a family. They can affect a family’s lifestyle, car choices, home location, friends and most importantly, their budget. According to the CDC/NCHS National Vital Statistics System, approximately 3.6 million babies are born each year in the U.S., representing a significant purchase period for households. There’s nothing like starting or growing a family to prompt parents to re-evaluate their current economic means and needs, along with steps they should take to plan for their financial future. Key products and services for banks and credit unions to focus on: • Life insurance • Investments

SELLING A BUSINESS The Credit Suisse Global Wealth Report shows that the U.S. currently has 24 million millionaires — more than any other country — and that number is growing. A great deal of this wealth comes from business ownership. The vast majority of small to midsized businesses are owned by individuals over the age of 50 and more than two-thirds of those businesses will have to be transitioned over the next ten years, according to the Exit Planning Institute. That transition of ownership — which can create a significant wealth event for a household — gives banks an opportunity to come alongside these newly wealthy individuals to help them manage, protect and grow their financial resources. Key products and services for banks and credit unions to focus on: • Private banking • Investments • High yield deposits

GETTING MARRIED Often, the act of two people merging households also brings with it a merging of finances. This creates an opportunity for banks and credit unions — either the existing primary financial institution or a new one — to establish a meaningful relationship with the newly joined couple. According to the CDC/NCHS National Vital Statistic System, there are approximately 2 million marriages every year. And the average cost of a wedding in the United States in 2022 was $30,000, according to The Knot. This makes newlyweds a prime market for banking services. Key products and services for banks and credit unions to focus on: • Checking accounts • Credit cards • Life insurance

• New partner • New location • New licensee

• Change in legal structure • Change in tax formation • Loan or credit card application

Consumer Life Events • Pre-movers • Newly engaged • Newly single • New graduate • Change in household composition • Material change in wealth • Home or auto loan application • Credit card or unsecured credit application

• Business checking • Merchant services

• Business credit card services • Consumer banking relationship

38 THE FINANCIAL BRAND INSIGHTS WINTER 2023

39

THE FINANCIAL BRAND INSIGHTS WINTER 2023

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