Bank Marketing Strategy + Ideas

There is a great article in the latest edition of FastCompany.com titled Mobile Melee.

It describes the companies and industries that are fighting it out to turn smart phones into “wallets” and who could ultimately control the multi-trillion dollar U.S. payments industry.

The interesting thing about the article is that it predicts that banks will be the first ones out of the competition, even though they have millions of customers, existing merchant relationships and “dibs on most of our money.”

Nick Hollard, a mobile-tech analyst with the Yankee Group, explains, “They (banks) are risk-averse and they tend to be technology laggards…I can’t see them innovating here.”

The other problem I see is that most community banks don’t do a lot of marketing.

They’ll have to start getting more aggressive with their marketing or their “core deposits” will end up on millions of smart phones instead of in their banks.

Several merchants such as Chipotle and Starbucks have their own mobile-money app.

Chipotle has an iPhone app that allows users to order their favorite burrito and pay for it before even showing up at their local restaurant. Reports claim that over 600,000 of these apps have been downloaded.

The Starbucks app allows users to load cash onto their mobile phones, which then display a barcode that a baristas can scan at the register. The article says that merchants are too self-involved to lead the charge. They’ll probably just partner with a bigger player, much like they do with the credit card companies now.

Credit card companies are a major threat since merchants already tout thousands of Visa payWave and MasterCard PayPass terminals. This gives them an advantage if the mobile – payments standard becomes tap-to-pay. American Express launched Serve this year, a mobile platform that lets users send and store money – without funneling it through banks. (Community banks, please read that last sentence again.)

American Express, MasterCard, Discover and Visa recently joined a mobile – money venture, Isis™, which was formed by AT&T, T-Mobile and Verizon. They are claiming that the Isis mobile wallet will eliminate the need to carry cash, credit and debit cards, reward cards, coupons, tickets and transit passes, fundamentally changing how we shop, pay and save.

The mobile carriers like AT&T, T-Mobile, Verizon and Sprint are experts at processing payments, especially billions of cell-phone charges. While AT&T, T-Mobile and Verizon teamed up to create Isis with the top credit card companies, Sprint linked up with Google several months ago. The problem with the mobile carriers leading the charge is that they are not known for major innovation.

David Evans, founder of the tech consultancy Market Platform Dynamics says, “Just because there are partnerships doesn’t mean there’s anything real there.”

The leading digital payments platform PayPal, which claims 100 million users, could be a major contender. They processed $3 billion worth of mobile transactions in 2011 and have a suite of very useful smart phone apps.

My 25 year-old son and all of his friends use PayPal on their iPhones on a daily basis. PayPal also has a Facebook Connect-like feature called PayPal Access that aims to streamline the entire virtual-payments process. And it’s working on a cloud-based NFC (Near Field Communications) alternative that will allow customers to pay for products by using their phones to scan bar codes or by entering their mobile number and a PIN at existing payment terminals.

The problem with PayPal is that their ambitions require strong relationships with physical retailers, which has not yet been a top priority for them. This late start could put them at a slight disadvantage.

The tech titans are the predicted winners of this fierce competition. Right now Google and Apple are leading the charge, even though Amazon with its $34 billion online retail operation and Facebook with its 800 million users could easily make a sneak attack.

Google and Apple both have plenty of assets (in addition to plenty of cash). These include great relationships with consumers, more pull with physical retailers than PayPal, an active culture of innovation, and because they both outfit market-leading smart phones, control over when NFC chips could become standard.

There’s still more work to be done but most analysts agree that Google Wallet – with its sleek interface, ad-based business model, and rising adoption rate – is a big, bold step in the right direction.

My recommendation to financial institutions is to learn as much about this technology as possible and maybe even promote that you can show your customers how to take advantage of this new banking innovation.

Maybe even create your own version of a “Geek Squad.” You want to be perceived as the expert in all banking-related products and services. Be thinking about how you can use all of this new mobile payment technology to your advantage. I would love to hear your thoughts….

###

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.

New banking regulations, reduced loan volume and intense competition are causing banks all over the country to search for ways to cut overhead.

FDIC data shows that small banks as a group are less efficient than the larger ones. In the most recent quarter, 76 cents of every $1 in revenue at banks with less than $100 million in assets was used to cover expenses. At the larger banks, expenses only consumed 58 cents – and this gap has been growing over the last several years.

But how can small community banks cut expenses in order to remain profitable without losing that “hometown personal service” that has been the mantra of community banks for many years?

Sooner than later, these community banks will have to do something they have never had to do before – they’re going to have to aggressively market, advertise and sell their products and services. They’ll have to concentrate on growing their revenue instead of just cutting expenses.

But before calling the local newspaper and running an ad promoting “local decision making” or “free checking,” banks need to think about what products and services they want to promote, who they want to target, and which customers are going to be profitable and which ones are not.

Here are some tips and ideas for community banks to think about that will help them in their marketing efforts:

Know what makes you unique.
What is it about your financial institution that makes you stand out? Do you have more branches, which could make it more convenient for potential customers, or do you offer mobile banking, which could be attractive to the younger generation? Maybe you offer Remote Deposit Capture, which many retailers, churches and apartment managers could use. Identify what makes you unique and differentiates you from the competition.

Know what products and services you are offering and why.
Which products are more profitable or easier to sell? Which ones have the greatest potential to increase business/profits in the future?

Identify who you want to target and why.
Who is your real target customer? Are you after small businesses, large businesses, high net-worth individuals, or do you want to be a one-stop shop for everyone? The “why” is just as important as the “who.” Ask yourself: do you really want to target the family of four that keeps a $43.50 balance in their checking account each month or the doctor’s office who keeps $25,000?

Understand your competition.
Do you really know who your competition is? Once you know who you are competing with, find out what these other banks and credit unions are offering. They might be advertising a 1% CD but adding an extra 50 basis points when the customer walks in. Do they offer free ATM usage? One way to find out is to use a “mystery shopper.” Local college students are great resources for this. You can find out a lot of information for a very reasonable cost.

Get a sales plan.
That’s right, a sales plan! Who is going to leave your building tomorrow to go out to retailers offering your remote capture services? If your sales team has never made sales calls, they will need training.

Create a referral program.
Put together a referral program for all bank employees and make it fun. Each Friday, you can list the winners and give away cash. (Everyone likes cash!) When a customer comes into the bank to open a new checking account, for example, reward employees for cross-selling additional products and services.

Know your targets.
Develop a list of what businesses you want to target, complete with their addresses, phone numbers and e-mail addresses.

Monitor sales activities.
Have a process in pace to monitor sales activities. Know who your sales team has called and who they have visited. Did they leave a message or speak to someone? Did they e-mail them or pick up the phone and call them?

Pull existing marketing materials and see if they need updating.
When was the last time you updated your marketing collateral? Companies like BankMarketingCenter.com offer affordable tools to help you design any marketing piece your bank will ever need. You can even personalize marketing materials with a potential customer’s name, logo or photo – all within seconds.

Update your website.
Make sure your website is up-to-date and easy for customers to use.

Turn your TVs into bulletin boards.
Stop promoting CNN or Fox on your widescreen TV’s in your branches.
Companies like WifiSignage.com offer a very affordable solution that can turn your TVs into “community event calendars.” You can produce your own messages and ads and have them playing on your TVs in seconds for less than what you’re currently paying for cable.

Make it easy for customers to do business with you.
Develop a “switch kit” or offer a “switch coach” to help customers easily move their accounts to your bank. It might seem easy for you, but many people and businesses will pay higher bank fees to your competitor rather than go to the trouble to switch to your bank – especially if they are already using online bill pay and remote deposit capture. (That’s why you want to be selling online bill pay and remote deposit capture!)

###

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!

###

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.

###

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.