With inflation affecting consumers and marketing budgets tightening, you have to make every acquisition dollar count. The good news? Credit unions are still growing steadily, with year-over-year assets up 2.6% at the end of Q1 2025. The not-so-good news? Industry-high customer acquisition costs (CAC) threaten that momentum.

Given these factors, traditional “spray and pray” ad spending and pricey incentive offers are no longer sustainable for community banks and credit unions. To break free from wasteful CAC, double down on high-value prospects by focusing on what they trust the most: referrals, reviews and loyalty.

The CAC situation in banking

Rising acquisition costs are putting pressure on financial institutions, especially those without the budgets of the Big Banks:

• Competition is intensifying, with digital-only fintechs driving up costs across the board.
• Banking is one of the highest-CAC industries, where acquiring an account can cost hundreds or even thousands of dollars.
• Digital ad results are declining. The average conversion rate (CVR) for Google Ads in 2024 was 6.96%, but Finance and Insurance averaged just 2.78%.
• CAC is now approaching or even exceeding lifetime value (LTV) in some cases, making long-lasting growth less sustainable.

Making matters worse, marketing budgets are often the first to be cut when profits lag. At the same time, digital ad costs are up: a Google Ad cost per lead increased 24% from 2023 to 2024, and over 5% from 2024 to mid-2025.

It’s now too risky to rely on broad, expensive ad campaigns—especially when better tools exist to target more qualified leads at a lower cost. Savvy community banks and credit unions are changing their approach by treating digital channels as a way to drive real growth, not just another expense to manage.

The focus is shifting from paying for clicks to paying for results, like new accounts and deposits. It’s a move toward greater efficiency—and greater freedom. And it couldn’t come at a better time, because as ads are getting more expensive and less effective, people are turning to something more powerful and personal: trust.

What consumers trust most

Today’s consumers are media savvy and skeptical of paid ads. They want honest feedback from real people. In fact, data shows that word-of-mouth and reviews are still the most trusted sources when people make decisions:

• Nearly all customers read reviews before deciding. A recent survey found 75% of consumers always or regularly read online reviews when considering a purchase. Only 3% never do.
• Reviews rival personal recommendations. Now, 50% of consumers trust reviews as much as advice from friends and family. A strong online reputation can be as persuasive as a personal referral to many.
• Referrals from friends/family are still the most powerful. Studies continue to prove that word-of-mouth marketing works. Nielson’s latest Trust in Advertising study showed 89% of people most trust a recommendation from someone they know. And it makes sense: if someone you trust and respect gives a product or service a thumbs up, you feel more confident that you’ll also have a positive experience.
• Loyalty and word-of-mouth increase growth. Banks and credit unions that deliver a great experience often turn satisfied account holders into enthusiastic advocates who naturally refer others. Rewarding those enthusiasts typically drives greater loyalty and more recommendations.

In short, people trust people. Personal recommendations and online review platforms like Yelp, Google and social media carry far more influence than traditional ads, drive better results and offer freedom from ever-rising ad costs. Referred accounts don’t just onboard faster, they stay active longer and generate higher profits over time. That’s why leading financial institutions are leaning into what we already know works: loyalty and referrals.

A smarter model for lower acquisition costs

To grow deposits while keeping CAC in check, financial institutions need to break free from inefficient advertising efforts and focus on performance-based growth. This requires two key shifts: aim for long-term, loyal relationships, not just accounts; and turn your account holders into your most effective acquisition channel through referrals.

These tactical strategies can help you make those shifts:

• Streamline the digital experience: Remove friction during onboarding. Simplifying the account opening process can raise conversion rates and improve retention resulting in less abandonments during the process.
• Partner with an expert: Referral-focused fintechs can help design and manage targeted campaigns that bring in qualified leads while freeing up your internal team to focus on what they do best: serve your account holders.
• Use your data: Track where referrals come from (email, social media, text, etc.) and personalize your messaging to maximize engagement. Financial institutions that continuously test, measure and adjust can better keep CAC under control and generate more positive results.

Performance-based growth isn’t just about better tools, though. It’s about better relationships. And you already have access to your most powerful method of growth: your account holders.

The power of trusted advocates

Your happiest account holders need to become your biggest advocates. Research shows that banks with high account holder satisfaction see significantly more referrals. By nurturing these relationships, you can tap into a virtually unlimited pipeline:

• Build a referral network: Make referrals easy with digital links, codes or sharable tools.
• Reward successful referrals: Instead of paying for clicks, reward your account holders when they bring in a referral who opens and funds an account. This ensures your budget goes toward actual results, not on creating opportunities for unqualified leads to game the system for perks and then churn.
• Leverage loyalty programs: Tie referral incentives to your existing loyalty program. Give points, cash or perks for each successful referral. This not only encourages advocacy, but it also boosts engagement and loyalty with your current base.
• Showcase real stories: Highlight testimonials, five-star reviews and member success stories on your website, social channels and in branches. Social proof is a powerful way to nudge undecided prospects into action.

Happy account holders are your best marketing team. Make sure you’re holding up your end of the bargain by delivering a seamless digital journey, first-class service and valuable incentives. Then, let their trust and advocacy do the work.

Refocus on referrals

As you can see, it is possible to grow deposits without a huge marketing expenditure. By shifting your focus to referrals (plus retention efforts like digital onboarding and engagement), you have the freedom to grow from the inside out.

An automated digital referral program where you only pay when an account is activated gives you the ROI you’ve been looking for, without adding additional stress to your team, or budget.

To learn more about increasing referrals and deposits while breaking free from rising account acquisition costs, check out our white paper.