Bank Marketing Strategy + Ideas

For several years now, I’ve been preaching about how banks and credit unions need to get their customers to use online bill pay and direct deposit. The reason is simple: the more bills a person or business pays online, the less likely they are to switch to another financial institution.

Once a person inputs all of their vendors and monthly bills, they won’t want to go through the trouble of doing it again with another financial institution.

But over the last couple of weeks, we have all seen that you can get people to switch banks. Just ask Bank of America, Wells Fargo and Chase. After raising their fees for debit card usage, millions of people complained – including President Obama! And many didn’t just complain, they switched to a community bank or credit union.

Kristen Christian, an art gallery owner in California, said she was dissatisfied with Bank of America’s “ridiculous fees and poor customer service,” so she created an event on Facebook called “Bank Transfer Day.” Within days, almost 80,000 people signed up.

Since then, the Credit Union National Association stated that 650,000 consumers nationwide have joined credit unions, contributing to $4.5 billion in new savings accounts.

There are many lessons here, but the biggest ones include the value of social media and the ability to adapt to changes in the marketplace. All it took was one person with a passion to start something that got 650,000 consumers to switch, moving $4.5 billion!

Deluxe Corporation recently announced the launch of SwitchAgent, a new solution for banks and credit unions that allows consumers to easily switch from one financial institution to another.

According to a study by J.D. Power & Associates, 66% of account holders would consider switching primary financial institutions, but many accounts go dormant due to the laborious transition process. SwitchAgent assists in shifting multiple billing vendors – such as mortgage payments, Social Security payments and utility bills – to new accounts, easing the transition process for both the financial institution and the consumer.

Another company, BankMarketingCenter.com, recently introduced an ad campaign for hundreds of community banks and credit unions called “Scan and Switch.” The ad features a QR Code that, when scanned with a smart phone, will automatically take potential customers to the financial institutions’ web-based switch kit.

Even Congress is getting involved. A bill recently introduced by North Carolina Congressman Brad Miller would eliminate this headache for consumers, making it easier to open and close bank accounts.

Miller is calling his bill, “The Freedom and Mobility in Consumer Banking Act.”

“As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks,” Rep. Miller said. “That is the way things work in a competitive, free market as unrepentant banks are still trying to rake in vulgar profits from their customers.”

Miller’s bill would require banks to make it as easy as technologically possible to switch accounts and would forbid practices aimed at keeping consumers locked in.

Now has never been a better time for community banks and credit unions to market their products, services and lower fees. But with the new technology and laws that make it easier for customers to switch, they’ll also have to start offering more products and better customer service!

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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.

It’s been all over the news for weeks and people everywhere are getting fired-up about it. Even President Obama recently aired his complaints to ABC News, saying it was unfair to customers.

We’re talking about bank fees.

So what’s up with these bank fees and why are banks charging them to customers? It’s simple economics, really.

Banks profit by loaning consumers and businesses money. But with the present low interest rates, banks must charge lower rates on loans and therefore, they make less money. Additionally, new federal regulations have forced banks to change their fee structure on overdraft charges and late payments on credit cards.

They have to make up that shortfall somewhere, so they turn to charging customers various new fees. And because interest rates are expected to stay low for some time, you can expect these fees to hang around for the foreseeable future.

According to a recent Associated Press article, here are some of the fees the big banks will soon unveil:

• Bank of America plans to introduce a $5/month fee for using debit cards.
• Beginning in December, Citi will charge $20/month to some customers who carry a balance of less than $15,000 on their combined accounts.
• Last week, Wells Fargo began charging $3/month for debit cards in five states.
• Earlier this year, JPMorgan Chase began charging a $3/month debit card fee in Wisconsin and Georgia.
• In June, SunTrust Banks of Georgia introduced a $5/month debit card fee for customers with basic checking accounts.
• Earlier this month, Regions Financial Corp. of Alabama began charging customers a $4/month fee for debit cards.

But all of this bad news could be a huge break for community banks and regional credit unions, who are largely unaffected by many of the new regulations. Big banking customers are angry – and getting angrier – and the environment is perfect for smaller banks to compete!

As fees increase, customers begin to consider their options. Now is the time for community banks and credit unions to get aggressive and market themselves as a viable alternative.

If your bank hasn’t done so already, launch an advertising campaign promoting your “fee free” offerings. Run newspaper ads, e-campaigns and post on social media sites what your bank or credit union has to offer that the big banks do not – mainly, free checking and debit cards!

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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.

Years ago, I invested in a flower shop. It wasn’t your typical corner flower shop filled with red carnations and yellow roses. In fact, we didn’t even have a shop. All we had was a van for deliveries.

I researched the flower industry and found that flower shops have very high margins, but very small profits. The main reason for this is the overhead cost and the fact that flowers are perishable. Since flower shops are typically in high traffic areas, their rent is often high. And they have to spend a lot of money on coolers and air conditioning.

We all know that flowers only last so long. If they don’t sell within a few days, you have to throw them away. So the secret, I believed, was to eliminate the overhead and sell the flowers before they wilted.

I hired a floral designer and we sent flower arrangements to all the top law firms, doctor’s offices, ad agencies, and insurance companies in town. This floral designer was also the salesperson. When one of our flower arrangements showed up to an office, our main salesperson got to meet the customer face-to-face. And because they came with flowers, the gatekeeper secretary always let them in!

We would deliver a large arrangement and let them know that we could deliver something similar every week for just $50. We started signing up customers. We would buy the flowers on Saturday from the wholesaler, make the arrangements on Sunday, and make all the deliveries before noon on Monday.

Since we knew how many arrangements we needed, we knew exactly how many flowers to buy. And instead of spending hours designing multiple arrangements, the designer would arrange all of them the same way. The best part was that when we delivered the arrangements on Monday morning, we’d pick up the vase from the week before, saving another $5. Our flowers were always fresh, and we had very low overhead and very high margins.

When you think about it, banks have similar challenges as flower shops. They are usually in high traffic areas, so their rent is high, and the money they collect in deposits needs to be invested in something quickly.

In banking, the secret is eliminating the overhead and utilizing the money instead of letting it sit in the vault. That’s why banks need to stop thinking about expensive branches and start investing in mobile banking.

People are spending hours each day on their phones, doing everything from e-mailing, texting and checking the weather to finding their way around a city or country. Most of these people, I suspect, would love to make deposits using their cell phones instead of driving through traffic to get to a bank.

And, chances are, they would also like to use their phone to pay their monthly bills as well as paying for the hamburger they are having for lunch.

Chipotle Mexican Grill has an app for the iPhone which allows you to order and pay for food right from your phone. You can use the app to find the nearest Chipotle and build your taco or burrito exactly how you want it. You can even include special instructions, like “easy on the beans” before you check out and pay for it. And yes, it saves your order so you can get your favorite burrito every single day without going through the process of rebuilding it every time.

Many banks haven’t even considered mobile banking. The market is still young and the time is now! Look at what PayPal, Ally Bank, ING and other internet banking services are doing.

My 25 year-old son and all of his buddies are using PayPal for almost all of their banking needs. When they all go out to dinner together, PayPal has an app that allows one person to pay the bill and then all of the others in the group can calculate what they owe and send the money to that person instantly. No need for pulling out a calculator or counting quarters, dimes and nickels!

My son doesn’t even open his monthly bank statement he receives from Bank of America. Everything is done on his phone or computer.

All you have to do is look at the sale of smart phones to see where banking is going.

If bankers don’t hurry up and find ways of cutting their overhead, they’ll be just like the local flower shop. They’ll be pushing daisies.

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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.

A reader of this blog recently asked my advice on the most economical and effective way to market an Internet bank. The truth is – basic marketing rules still apply.

Like with marketing traditional banks, your primary concern should be who your audience is.

Internet banks attract a very specific kind of banking customer – one that is computer savvy and comfortable doing business online. These kinds of customers are typically open to new banking technologies such as remote deposit capture and online bill pay, for example.

But as with any marketing strategy, the key is reaching these folks and attracting them to your Internet bank.

Ally Bank does a great job with their TV commercials (this is one of my personal favorites: http://www.youtube.com/watch?v=suBGbef5p3g), but I believe there is a lot of waste for them with this media buy. Though the ads are clever, are they really reaching Ally’s intended audience? Many viewers of these commercials don’t use computers or even have Internet access. (But then, Internet banks like Ally don’t have the overhead of a traditional bank branch, so they can afford to have a little marketing waste.)

A more targeted approach would be more beneficial. For example, start by focusing on selling an Internet-based service like remote deposit capture. Identify companies that could profit from using remote capture – companies that collect a large number of checks each day such as apartment communities, retailers, utility companies, large churches, etc. – and go after them.

Target these customers with banner ads on websites they might frequent. Select these websites carefully and make sure they are industry specific. For instance, you could run ads on websites that apartment managers and owners visit such as http://www.naahq.org/Pages/welcome.aspx or websites frequented by church business administrators http://www.nacba.net/Pages/Home.aspx.

Once you identify who your target audience is and where they go online, promote how your services solve their specific business pains. For example, focus on the liabilities of having an employee driving across town every day to make deposits. (If they get robbed and injured, the employee’s family could end-up owning the business!)

In addition to online advertising, use traditional methods such as direct mail, trade shows, magazine ads, and even salespeople making phone calls to target these vertical markets.

People are already moving away from traditional banks because of their high fees. And for banks, overhead is only going to climb. The beauty of internet banks is that once a company or individual puts all of its payables online for bill pay, it makes it hard for them to switch banks!

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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.