Unlock Lifetime Value: Why the First 90 Days in Banking Are Crucial

In the competitive realm of financial services, the initial 90 days of a new customer relationship represent a pivotal period. This brief window isn’t just a starting point; it’s the foundation that dictates long-term engagement, profitability, and the depth of product adoption.

Unfortunately, many financial institutions (FIs) still approach onboarding as a mere procedural checklist rather than a strategic imperative. This oversight carries substantial costs, impacting both financial outcomes and the strength of customer relationships.

Data consistently reveals a clear truth: early interactions profoundly shape the entire customer journey. FIs that prioritize and invest in robust onboarding strategies consistently outperform their peers. They attract more customers, achieve faster growth, and cultivate more valuable, enduring relationships. Those that neglect this phase often find themselves constantly chasing growth that could have been secured from day one.

At Marquis, this insight is central to how we empower our clients’ long-term success. The momentum generated within those crucial first 90 days is a powerful catalyst for sustained growth. This period is far more than a “honeymoon phase”; it’s an unparalleled opportunity when new customers are most receptive to communication and guidance.

Onboarding: The Engine of Enduring Growth

When executed effectively, onboarding generates vital insights, builds awareness, and establishes traction. It defines the very nature of the relationship and stands as one of the most potent levers an FI possesses for increasing customer lifetime value. The capacity to guide, communicate, and personalize during this phase has profound, lasting effects on product adoption, retention rates, and overall profitability.

Consider a real-world example from a community financial institution, analyzed using Marquis’ Conversational Analytics tool, KEYs.ai. A comparison of households (HH) with less than one year of tenure against the overall HH data in an adoption analysis reveals compelling patterns:

Product Adoption Insights:

• Most products are acquired early in the relationship, with limited cross-selling occurring in subsequent years. Missing an opportunity in the first year makes it exponentially harder to generate new product adoptions later.
• New Households (tenure < 1 year): 1.84 unique products
• All Households: 2.12 unique products

This starkly illustrates that a weak start in the first 90 days rarely leads to strong engagement later, whether in year two, three, or throughout the entire relationship lifecycle.

Household Product Mix:

The distribution of single and double-product households remains remarkably consistent between new and tenured customer segments. This suggests that households that don’t diversify their products early on often remain undiversified.

• % Single Product HH – New Households: 22%
• % Two Product HH – New Households: 72%
• % Single Product (All Households): 24%
• % Two Product (All Households): 71%

Deposit Balances:

• New HH Average Deposit Balance: $2,228
• All HH Average Deposit Balance: $9,744

These figures align with expectations: moving funds, setting up direct deposits, and consolidating external relationships take time. However, the opportunity is undeniable: the early months are ideal for establishing foundational products. New accounts and product types are significantly less likely to be adopted later.

Key Insight: Focus on opening more than just a basic checking or savings account at the outset. While FIs might hesitate to offer low-balance money market accounts, CDs, or additional savings accounts for specific goals due to initial smaller balances, creating pathways for these products early can be highly beneficial. Strategies like extended grace periods for minimum balance requirements or tiered rates that encourage further deposits help solidify product relationships early. Furthermore, the friction associated with opening new accounts later can be significantly reduced if these options are presented and adopted early in the onboarding process.

Given that many banks and credit unions still grapple with streamlining online deposit account origination, a clear roadmap for deposit product growth during onboarding becomes even more critical. The investment in a long-term financial relationship truly begins at this early stage.

Lending Momentum and Subsequent Decline:

This institution also revealed an interesting, albeit intuitive, dynamic:

• New HH Average Loan Balance: $33,515
• All HH Average Loan Balance: $17,710

FIs frequently attract new households through lending products. In this instance, new households arrive with substantial loan balances. However, over time, loan balances and the number of loan products often decline, while checking accounts may be added.

Most tellingly, the average profit per household shows a concerning trend:

• Year 1: $272
• All Households: $162

This downward trajectory highlights a critical challenge: high-value loan relationships often fail to translate into sustained long-term profitability unless they are complemented by additional products and ongoing engagement. Without deliberate onboarding and cross-selling efforts, institutions risk merely swapping one product for another, like a checking account for a loan, without boosting overall profitability.

The Unmistakable Narrative of Onboarding

The data unequivocally demonstrates that the first 90 days are definitive for the customer relationship.

Across diverse institutions, similar patterns emerge: households either engage meaningfully early on, or they seldom achieve full engagement. The majority of products are adopted within the first year, often within the initial few months. If these opportunities are not seized promptly, the window of opportunity rapidly closes.

Here’s the story the numbers tell when an active onboarding program is absent:

• Product adoption occurs early, then momentum dramatically diminishes.
• A lack of early product diversity tends to persist throughout the entire relationship.
• Deposits typically start small and rarely expand into new product types.
• The marketing resources required to add additional loans or deposits after the initial onboarding period become significantly higher.

The critical takeaway is clear: long-term value is either built or lost within the first 90 days. Robust onboarding is not merely a process; it is a fundamental growth strategy.

The Financial Ramifications of Onboarding Success (or Failure)

A compelling illustration of onboarding’s long-term value is evident in product category penetration segmented by tenure. New households (less than one year) are represented by dark purple bars, while all households are shown in light purple.

The pattern is revealing: there are limited instances of significant product growth across categories over time. In many cases, growth in one area, such as checking accounts, effectively replaces a reduction in another, like auto loans.

This visual reinforces a crucial truth: the relationship’s depth and definition are established early. If long-term relationships naturally evolved and deepened, we would anticipate seeing increases in product adoption relative to the first year. Instead, the data clearly indicates that long-term growth is directly proportional to the effectiveness of short-term onboarding execution.

Quantifying the Opportunity and Risk

To grasp the profound financial impact of onboarding, let’s quantify how even minor shifts in performance can dramatically influence long-term revenue. Using the previously mentioned FI as a baseline, we assume:

• Average margin: 3.5%
• Average deposit balance per household: $9,744
• Current number of new deposit households (Year 1): 8,302
• Average household tenure: 8 years

Now, consider the impact of a modest 10% or 20% change in the onboarding effectiveness of first-year households, representing either an increase or decrease in performance:

• 10% change: +/- 830 households
• 20% change: +/- 1,660 households

Applying this change to the average deposit balance, margin, and tenure, the calculations are compelling:

• 10% change: +/- $2.2 million in lifetime revenue
• 20% change: +/- $4.5 million in lifetime revenue

These figures are conservative, as they do not account for additional revenue streams such as interchange income, fee income, mortgages, or referrals to investment services.

To put this into perspective: for this specific FI, such a swing in revenue represents approximately 3% to 6% of their net income. This isn’t just a performance statistic; it’s a budget-altering reality. It provides a clear, compelling rationale for making onboarding a top strategic priority.

A Marketing Challenge, Often Overlooked

Many banks and credit unions dedicate significant time and resources to marketing efforts aimed at long-tenured customers. While being a consumer’s Primary Financial Institution (PFI) undeniably opens doors for repeat business, our observations across FIs of all sizes consistently show that the most efficient marketing investment occurs within the first 90 days.

Beyond this initial period, the returns diminish. You end up spending more money and resources for a comparatively smaller lift. For FIs operating with limited resources, this presents a critical strategic dilemma. Knowing precisely when to focus your attention is just as vital as understanding where to direct it.

Onboarding: Beyond Just Sales

While much of the discussion around onboarding naturally revolves around deposit growth, lending, and cross-selling, it’s crucial to remember that not every meaningful touchpoint must involve a direct sales push.

The onboarding phase offers a unique opportunity to firmly establish your FI’s identity, communicate its core values, and solidify its relevance in a customer’s or member’s financial life. Supplement your outreach with these essential elements:

• Provide Education: Offer financial literacy resources, product guidance tailored to specific financial goals, and clear instructions on digital banking tools.
• Build Credibility: Actively communicate your commitment to the community and highlight your history of dedicated service.
• Foster Connection: Personal touches such as a welcome letter from leadership, introductory videos, and personalized outreach can make a significant difference.
• Utilize Every Available Channel: Leverage email, online and mobile platforms, digital targeting, and even direct mail, which still proves effective.

New customers or members are most attentive during this initial phase—more so than at any other point in their relationship with your institution. This makes onboarding the optimal time to be both genuinely helpful and strategically assertive.

Source: thefinancialbrand.com