Bank Marketing Strategy + Ideas

By Neal Reynolds

A few weeks ago, I wrote a blog entitled, “Prevent bank branch closings with free WiFi” that received a huge response.

Then, just last week, the Wall Street Journal wrote an article “Bank To-Do List: Make a Deposit, Grab a Brew, Maybe Strike a Pose,” where they talked about the many ways banks are drawing potential customers into their branches.

Umpqua Bank in Portland, Oregon, threw an Oktoberfest-style celebration last fall with pretzels, beer and a strolling accordion player. A crowd of 150 people showed up! This is just one of many community events and programs this bank offers in their 200-plus branches.

Connex Credit Union in Connecticut hosts educational events for first-time homebuyers and for senior citizens trying to understand Medicare, while TD Bank offers free coin-counting machines.

The thinking is that the more reasons a bank can give customers and potential customers to come into one of their branches, the better chance they have of getting their business.

The concept seems to be spreading with more bank branches turning into community centers instead of just transactional hubs. Many banks have been calling themselves “community banks” for years, so now is a great time to truly become one.

The Wall Street Journal article mentions a study done by Financial Management Solutions, Inc., that found that monthly teller transactions at community banks and credit unions plummeted 40% from 1992 to 2012.

Obviously, many bankers welcome this trend because an online transaction is much more profitable than paying rent and salaries at all of their branches.

But closing branches isn’t cheap. In additional to sending a message to employees that you have to cut back, it also tells the community and your competitors that you can’t afford to keep investing in the community.

When a bank offers free WiFi, beer, pretzels, or any kind of seminar or event, they need to think of it as a marketing event. Someone needs to be in charge with the goal of developing as many leads as possible.

Rather than just offering an empty boardroom, someone needs to be there greeting and capturing names, addresses and phone numbers – just like at a trade show.

Those employees responsible for “working” the room or event should be trained on what the bank is trying to accomplish. Remember: The end result is obtaining new customers or cross-selling existing customers on another product. This requires knowing how to ask the right questions and being knowledgeable enough to recommend additional bank products to customers.

This is also a great way to research what potential customers are looking for in bank products and services.

I think banks will find it’s a lot easier to cross-sell other services in a branch location than it is online. The last thing I want when I’m checking my balances online is a banner or window that keeps popping up, trying to sell me something else.

But when I’m in a bank branch drinking free coffee or beer, I’m all ears!

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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at nreynolds@eadshop.com.

For the last couple of years, bankers and financial gurus all over the world have been trying to predict where the banking industry is going. We’ve all heard about the “digital wallet.” There’s Google Wallet, MasterCard’s PayPass Wallet, Square Wallet, Lemon Wallet, PayPal and more.

But while everyone was making their predictions, a pseudonymous developer named Satoshi Nakamoto introduced a decentralized digital currency in 2009 that is based on an open-source, peer-to-peer internet protocol. In a little over three years, the value of that currency, called Bitcoin, has grown to over 1 billion in U.S. dollars. Forbes announced today that the currency’s value has risen from $13.50 to $100 in just the last three months.

On Friday, March 29^th Fox News reported that this currency has surpassed 20 national currencies in value – and I’m willing to bet that many in the American banking community have never even heard of it!

My son, who is in his twenties, has been telling me about his “investment” in Bitcoin for years. His explanation on how this currency works went in one ear and out the other. Today he asked me if I knew what was going on in Cyprus.

After trying to impress him with all I’d learned from reading the Wall Street Journal, he informed me that his investment had doubled in value over the last few days because of what was going on in the small island country.

The fast growth of this currency has even attracted the attention of the United States Treasury Department, who just enacted new rules to regulate Bitcoin and other virtual currencies, making it subject to the same level of scrutiny as other forms of currency.

The problem for the Fed is that the developers of this currency have made tracking very difficult.

I decided to research “Bitcoin” and got a quick lesson in virtual currencies. I found out that Bitcoins can be exchanged by a personal computer or smart phone through a “wallet” file or website. You don’t need an intermediate financial institution – just software.

Sounds a lot like Google Wallet, minus the need for a financial institution. And since the banks in Cyprus are all shut down or limiting cash withdrawals, thousands of people are exchanging what money they have left for digital currency.

This just shows what happens when people lose faith in their country’s banking system. We can all see what happened to our economy after the FDIC went around shutting down banks and what our Federal Reserve has done in controlling the U.S. dollar.

Two weeks ago the world watched with amazement as Cyprus banks took money out of people’s hard earned savings accounts. But isn’t that what happens to many of us in America when our Federal Reserve adjusts the interest rates or buys up mortgage bonds? With Bitcoin, there is no central authority to regulate or manipulate the monetary base.

Since I work with a lot of banks and credit unions, I’m very familiar with all of the compliance information that financial institutions are required to give their customers.

Could you imagine using this Bitcoin “compliance” copy I retrieved from Wikipedia to explain your bank’s services?

Bitcoin does not operate like typical currencies: it has no central bank and it solely relies on an internet-based peer-to-peer network. The money supply is automated, limited, divided and scheduled, and given to servers or “bitcoin miners” that verify bitcoin transactions and add them to a decentralized and archived transaction log every 10 minutes. The log is authenticated by ECDSA digital signatures and verified by the intense process of bruteforcing SHA256 hash functions of varying difficulty by competing “bitcoin miners.” Transaction fees may apply to new transactions depending on the strain put on the network’s resources. Each 10-minute portion or “block” of the transaction log has an assigned money supply. The amount per block depends on how long the network has been running. Currently, 25 bitcoins are generated with every 10-minute block. This will be halved to 12.5 BTC during the year 2017 and halved continuously every 4 years after until a hard limit of 21 million bitcoins is reached during the year 2140.

Doesn’t this make you want to take all the money you have hidden in your mattress and go buy some Bitcoins?

So, is Bitcoin a bubble, a well disguised Ponzi scheme, or is the world really ready for a decentralized currency? Only time will tell.

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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at nreynolds@eadshop.com.

In the most recent edition of the ABA Banking Journal, there is a sobering article about all of the bank branch closings over the last couple of years (Time to close under-performing branches).

Over 2,300 offices have been closed to date and many more are in the process.

Much of this is caused by in-branch transaction volumes dropping by 10% annually in many institutions. As a result, banks of all sizes are now looking at their networks for opportunities to reduce expenses.

And with the potential impact of Basel III capital requirements, bankers will be paying more attention to underperforming branches since these requirements cause more capital to be allocated to individual branches.

The article goes into great detail on how banks should evaluate the profitability contribution of each of its branches. It even suggests five steps bankers should take prior to implementing a closure.

But before you contemplate a closure, I would like to offer a suggestion. Have you ever wondered why McDonald’s offers free wifi in 12,000 of its U.S. locations? Or why Starbucks offers free wifi in its 7,000 locations?

Could it be that free wifi attracts customers?

Every time I’ve gone into a Starbuck’s there is more business being conducted there than in most business complexes or executive suites. A lot of small businesses use their local Starbucks as a convenient meeting room. There are thousands of job interviews and research projects done in Starbucks every day.

Research has shown that a third of all households with an annual income of less than $30,000 still don’t have broadband access. With so much of education today involving research on the internet, federal regulators indentified the gap in home internet access as a key challenge for education.

I hear repeatedly from bankers all over the country that they would never consider providing public access to wifi in the branches because of security concerns.

Wouldn’t you think McDonald’s and Starbucks and thousands of other businesses that offer free wifi would be equally concerned about security? There are very inexpensive ways for financial institutions to offer secure wifi.

Many banks already promote free coffee and cookies. Think about what would happen if they started promoting free wifi as well. With millions of small business owners working from home now, a bank branch could offer a number of valuable benefits to them: a place to network, a quiet place to work, free internet access and possibly a small business loan!

They could even offer up an infrequently used board room or an empty loan officer’s desk. I believe there would be a long line of small businesses coming down the street from the local Starbucks to take advantage of these amenities.

Another benefit to having wifi in the branches is the opportunity for marketing departments to install digital signage throughout the building.

Marketing directors could develop ads that cross-sell multiple products and have them running continuously in all of their branches without even having to leave their office.

They could also use the signs to promote different community activities. And I think you’ll agree, promoting the community is what makes a community bank a community bank!

So before you start contemplating closing a bank branch, consider using wifi to bring the community back into your branches.

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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at nreynolds@eadshop.com.

As we say in the south, either fish or cut bait.

When it comes to mobile banking, banks had better get on board or start looking for a closed sign. In the last couple of months, I spoke at the Nebraska Bankers Association Marketing Conference and at the Wolters Kluwer Financial Services Users Summit.

I was shocked at the number of banks that said, “We’ll never offer mobile banking. It’s not secure and my customers don’t want it.”

Maybe that explains why research from Javelin Strategy & Research says that credit unions are outperforming community banks in mobile banking, with nine out of 10 credit unions offering web-based mobile banking!

They also found that three out of 10 community banks do not offer a single form of mobile banking.

Consumer mobile banking growth follows smartphone adoption, which is now at 52% and growing. Javelin research reported that mobile banking added 10 million more U.S. adults in the past year as smartphone usage surpassed feature phones and tablet adoption surged to 21%.

My generation didn’t grow up with computers, smartphones or texting, but I personally love “text” banking. I own multiple rental properties in a couple of states and have my tenants deposit their rent directly into my bank. I get text messages instantly showing when their deposits are made and the amount.

I can type in “BAL” to see my balances instantly and “LAST” to see all of my recent history including payments that I’ve made.

A recent PEW Research study found that text messages have doubled from 60 to 100 per day in the 14-17 year-old age group. I know most banks aren’t interested in this age group, but they need to be interested in what’s going on with this younger generation. Mobile banking is the future and the sooner banks embrace it, the better.

The Intuit Financial Services Financial Management Survey reveals how Generation Y banking customers (those born after 1980) differ in their banking habits from the rest of us. Half of 18-32 year-olds use their smartphones to check balances or make payments. That’s compared to 20% among the public at large.

Every company in America would love for Consumer Reports to endorse their products and services. So bankers, here’s what Consumer Reports says about yours.

“Mobile banking is convenient. Anytime-anywhere account access makes seat-of-the-pants money management possible. For example, you can review your account balances while waiting in a checkout line to see if you should use your credit or debt card for the purchase.

You can also transfer money between accounts, monitor availability of deposited funds, and pay bills. Your bank can send text alerts when your checking balance is low or when withdrawals and deposits are posted to your account. You can get alerts for debit and credit card purchases that exceed a set amount, which might indicate fraud.

The latest innovation, called “remote deposit capture,” in mobile-banking parlance, lets you snap a photo of a check with your cell-phone camera and “deposit” it into your account. You can’t get cash out of your cell phone yet, but you can use it to find the nearest ATM.”

Research from multiple companies shows that mobile phone usage is exploding. Half of our younger generation is using mobile banking and we have Consumer Reports telling everyone why they should be using it.

We have many very good companies in the banking industry that offer secure mobile banking applications to financial institutions. The only reason I can see why banks don’t embrace mobile banking is either that they are scared or they had rather cut bait!

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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at nreynolds@eadshop.com.