With payments as the entry point to banking relationships, the lender cultivates a low-cost funding base, said executive Arijit Roy.<\/p>\n\n\n\n
As banks battle for deposits, U.S. Bank is leaning into a particular product suite to woo Gen Z customers. <\/p>\n\n\n\n
Gen Z thinks about banking as \u201cthe place where they have their primary payment vector,\u201d which might be a peer-to-peer payment platform or a credit card, rather than where they have a checking account, said Arijit Roy, the Minneapolis-based lender\u2019s head of consumer and business banking products. <\/p>\n\n\n\n
\u201cThey identify with banking almost with their payments vehicle as the lead-in,\u201d he said. That\u2019s inspired the bank to make its Bank Smartly credit card quick and easy to apply for and tie it to other products so customers are incentivized to do more with the lender.<\/p>\n\n\n\n
The super-regional launched its Bank Smartly checking account in 2022. A Smartly savings product and credit card followed in 2024, and the savings offering has amassed nearly $50 billion in deposits since then, CFO John Stern said at an investor conference<\/a> last month. <\/p>\n\n\n\n CEO Gunjan Kedia, at that same conference, said U.S. Bank has been intent on improving the quality of its deposit base, cultivating deeper relationships and appealing to all generations of consumers.<\/p>\n\n\n\n With Smartly\u2019s spend-and-save combination, the $700 billion-asset bank is betting younger generations will also be drawn to the ability to access rewards sooner, not just after reaching an affluent tier or depositing a large sum, Roy said. <\/p>\n\n\n\n U.S. Bank sees \u201ca fair amount of halo\u201d for users who pay off their credit card balances rather than letting them revolve, Roy said in a recent interview. <\/p>\n\n\n\n \u201cPeople may not be switching their primary checking relationship to us, but because they transact on the card and they\u2019re paying off their balances on a pretty regular basis, they\u2019re actually parking more balances in the Smartly checking account,\u201d Roy said. <\/p>\n\n\n\n Since U.S. Bank doesn\u2019t pay any interest on those accounts, it\u2019s cultivated a low-cost funding base, he said. \u201cYou\u2019ve got highly engaged clients that are unlocking their reward structure by bringing more deposits in, where we don\u2019t have to pay up on high rates,\u201d he said.<\/p>\n\n\n\n In the first quarter<\/a>, the bank\u2019s average consumer deposits rose 2.7% year over year, although they remained flat quarter over quarter, at $270 billion.<\/p>\n\n\n\n The Smartly products are giving the bank a leg up over peers, \u201cto weather deposit wars that everybody\u2019s running into, by having a liquid product,\u201d Roy said. <\/p>\n\n\n\n He said the lender is attracting younger customers and has seen a reduction in its cost of acquisitions, although the bank declined to provide figures around either, or detail any growth targets related to Gen Z retail customers. A bank spokesperson pointed to partnerships with a few dozen colleges and universities as an avenue to connect with Gen Z. <\/p>\n\n\n\n Still, U.S. Bank is \u201cdeliberately not planting a flag and saying we\u2019re going after a segment,\u201d Roy said. \u201cWe\u2019re a lot more focused on being multi-decade in nature,\u201d and the bank wants to attract and retain customers for the long haul, he said. <\/p>\n\n\n\n Of course, U.S. Bank faces fierce competition from other lenders and fintechs, particularly in courting younger customers. Peer-to-peer payment player Cash App<\/a>, owned by Block, seeks to expand its relationship with customers, as do fintechs and buy now, pay later firms including Chime<\/a> and Klarna Group<\/a>.<\/p>\n\n\n\n Whether U.S. Bank\u2019s products are sufficient to compete with fintechs is a frequent topic of conversation within the bank, Roy indicated. \u201cWe have a lot of debate on this topic internally,\u201d he said. \u201cIt\u2019s something that we pay a lot of attention to.\u201d <\/p>\n\n\n\n Fintechs have taught banks to be client-centric and \u201crelentless about making it as seamless as possible for clients to engage,\u201d and banks still have work to do there, he said. <\/p>\n\n\n\n But banks have trust and longevity on their side, he asserted, which sets them apart from \u201ca group of individuals whose credo is \u2018move fast and break things.\u2019\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" With payments as the entry point to banking relationships, the lender cultivates a low-cost funding base, said executive Arijit Roy. As banks battle for deposits, U.S. Bank is leaning into a particular product suite to woo Gen Z customers. Gen Z thinks about banking as \u201cthe place where they have their primary payment vector,\u201d which […]<\/p>\n","protected":false},"author":2,"featured_media":186,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-185","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-credit"],"_links":{"self":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=185"}],"version-history":[{"count":1,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/185\/revisions"}],"predecessor-version":[{"id":187,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/185\/revisions\/187"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/media\/186"}],"wp:attachment":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}