Bank Marketing Strategy + Ideas

Everywhere you look these days, people are on their smart phones.

They are on them while they’re waiting for their flight at the airport, while waiting for their food at a restaurant, and even while waiting for the movie to start or the light at the intersection to change.

They are either checking e-mails, sending text messages, watching movies, playing games, taking pictures, getting directions, checking the weather, reading the Wall Street Journal, scanning bar codes or QR Codes, checking the time, or programming their DVR. Some are actually making a phone call!

Do you think that before long all of these people will also be using their smart phones to check their bank accounts or pay bills? Or pay for that popcorn and Coke at the theater? Even make deposits?

For banks that have not been paying attention, now is the time to act. The big question for the banking industry is who will establish the relationship with these cell phone users? Will it be the banks? Or will it be the telephone companies?

Banks have already learned that “do-it-yourself” online banking customers are a lot more profitable than “walk-ins.” With online banking, banks can reduce their number of branches, payrolls, administrative costs, and handling charges. Now they just have to give all of those smart phone users the ability to bank with their phones, giving them anywhere, anytime banking.

But where do they start?

Most of the top banking software providers – like Jack Henry & Associates, Fiserv and Fidelity (FIS) – are now offering mobile technology. Their offerings support all three modes of mobile banking – Wireless Access Protocol (WAP), downloadable applications, and SMS/text – allowing financial institutions to target different segments of their client base with the most appropriate mobile banking solution.

Banks will have to start aggressively marketing these new technologies or risk losing their customers to other banks or to the telephone companies.

Since the target market is cell phone users, the first step would be to begin collecting cell phone numbers. Banks can use this information to send promotional text messages asking potential customers to sign up.

Now I’m sure there are some banks thinking, where do I get cell phone numbers? Start by looking at what other companies or organizations are doing. I recently went to the American Idol concert in Atlanta. They ran a promotion on the screen asking everyone to text their vote for their favorite Ford TV commercial. The winner would win a pass to a “backstage party” with the singers after the concert.

I voted and guess what happened? Within hours, I started receiving promotional messages from Ford promoting their new line of vehicles. Banks could give away what they are known for: cash. Everyone likes cash!

The days of people walking into the local bank to make a deposit are almost gone.

Before long, people will be scanning their checks with their smart phones to make deposits. There will be no need for banks to give away free cookies and coffee.

But banks had better wake up and get going because time is running out!

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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 a small business owner, I remember the days when deposits had to be made at my bank by 2:00 PM. The mailman would sometimes be late coming by my office, so I would always stress out over covering the checks I needed to pay or had already written.

I even kept a map of all the bank branches so that if a client called to pick up a check, I knew where I could make the deposit in time.

I remember the day when my bank’s ATM started allowing me to deposit checks as late as 8:00 PM and still make it into my account that day. Of course, by then the mailman wasn’t coming until 5:00. The good news was that deposits could go into my account the same day. The bad news was that checks I had written would also clear the same day.

No more float for small businesses.

But now there is exciting news for small businesses. Businesses can take a photo of checks with their smart phones and deposit them into their checking accounts within seconds. No need for ATMs. No need for computers. No need for the internet. No need for bank branches. And no need for bank employees.

Until recently, banks and bankers have always had a great reputation. In every small town in America everyone knew their local banker. These days are changing.

So what are banks suppose to do? They’ll also need to change. Banks will have to start promoting and marketing these new services before their competition does. And their competition isn’t just the bank across the street anymore – there’s competition coming from everywhere.

Banks can’t just sit back, offer free checking, and expect customers to come flocking in. They’ll need to aggressively promote their mobile banking, online banking, remote capture, and their local community support.

They’ll need to learn to use QR Codes in their ads and how to use text promotions and e-mail campaigns. They’ll need to learn to blog and provide their customers with useful information on how to budget, save, and how to pay for their child’s college education.

Make no mistake: the banking industry is changing. And for bankers who aren’t paying attention, it could mean their jobs.

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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.

Brace yourself: here come the fees.

Last week, we talked about how the country’s banking environment is evolving in light of recent regulatory changes and their negative revenue impact on banks. Recent federal regulations have capped overdraft fees, certain levies on credit cards, and even what banks are allowed to charge merchants when customers use their debit cards.

Now, banks are making a move to recap some of that lost revenue.

Check out these recent headlines about how banks like Wells Fargo, SunTrust and Regions Bank are beginning to charge monthly fees for debit card use for customers in some states. Will community banks follow suit?….

Atlanta Journal-Constitution – Debit card fees could signal trend:

http://www.ajc.com/business/debit-card-fees-could-1122638.html

CNNMoney – Wells Fargo to test $3 a month debit card fee:

http://money.cnn.com/2011/08/16/pf/debit_card_fee/index.htm

Wells Fargo: No more debit card rewards:

http://money.cnn.com/2011/08/22/pf/wells_fargo_debit_rewards/

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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.

Let’s all say goodbye to banking as we know it. The writing is on the wall. Or, should we say, the writing is in the new Dodd-Frank financial reform bill.

For many years, community banks have handled the financial needs of local towns and communities. These banks took in deposits, made loans, and earned a small margin in between.

Then someone in our government decided that these banks should loan money to folks that might not be able to pay the money back. This was called the Community Reinvestment Act and it empowered regulators to punish banks that failed to “meet the credit needs” of “low-income, minority, and distressed neighborhoods.”

The two government-chartered mortgage finance firms – Fannie Mae and Freddie Mac – encouraged this “subprime” lending by authorizing ever more “flexible” criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued. Most of the “bad” loans in this country were bought by either Fannie Mae or Freddie Mac.

We have all seen the results of this Act over the last couple of years.

Many community banks made a lot of real estate loans based on the fact that 1) they “ain’t making any more land!” and 2) real estate values had historically increased. In the fall of 2008, the regulators decided that real estate loans were bad and proceeded to force these community banks to quit making real estate loans and to write down the loans they already had.

As the required capital dwindled in these banks, regulators forced the banks to raise more with the threat of a “cease and desist” order. This basically told the directors to raise capital or they would shut down the bank. This “order” became public knowledge and was published in many hometown newspapers. Guess what happened next.

Remember the movie It’s a Wonderful Life? Well, being a bank officer and director during this time wasn’t exactly a wonderful life.

Depositors were going into the banks and withdrawing their money while the real estate borrowers quit paying their loans, telling the banks they would just buy these loans back at 10 cents on the dollar from the FDIC when they failed. And that is exactly what they were able to do. The FDIC would shut the banks down and then sell the loans for 10 to 20 cents on the dollar. Many of these banks had participated these loans out with other banks, so when one bank was shut down, it contributed to other banks failing as well.

Now the Dodd-Frank legislation has come along, which will put the nail in the coffin for many more banks. This law will add a lot more cost to banks with the increased reporting, analysis and requests for information. These expenses will be in addition to increased FDIC insurance costs the FDIC has imposed to pay back its losses.

What does all of this mean to a bank’s customers? Ultimately, banks will have to start charging more for checking accounts and other services. In fact, Bank of New York has even started charging customers for depositing large amounts of cash. An article in a recent issue of Fortune magazine stated that an estimated 4 million customers left the biggest 30 banks last year because of fees and an additional 11 million are expected to leave this year.

Where are they going?  Many are buying prepaid debit cards from companies like Wal-mart and American Express. They are also heading in record numbers to payday lenders like Cash America International and Quicken Loans for mortgages.

So what does all of this mean for banks? Well, things will need to change.

Banks must stop assuming that customers will just walk into their bank because they are convenient. Just like any other business, they’ll have to start calling on potential customers. They’ll need to start marketing themselves more. They’ll have to promote services like remote capture deposit and online bill pay. And they’ll need to customize and personalize their products and services to fit the needs of individual customers.

Many investment bankers are predicting that in the future there will no longer be banks with less than $500 million in assets. Banks will either grow up or they’ll be gone. Small community banks need to get busy!

Follow our blog over the next few weeks for a special series of posts highlighting innovative ways to effectively market your bank in this changing financial environment…

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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.