Bank Marketing Strategy + Ideas

In this new era of banking, where real estate loans are often frowned-upon by regulators, niche markets are popping-up fast. Instead of loaning money for new buildings, financial companies are even lending money for new babies.

“Fertility Finance” companies are partnering with doctors to make loans for in vitro fertilization, fertility treatments and egg harvesting.

In the past, couples have used home equity loans and credit cards to fund fertility treatments. But with traditional forms of financing drying up, dozens of companies like Springstone Financial LLC in Southborough, Mass, NBT Bancorp of Norwich, NY, and My Medical Funding in Tampa, FL, are working with doctors to promote this financing.

Their pitch is that these loans will help grow patient demand.

Traditional loans made by banks are governed by state and federal banking regulators, but some of these firms that get money from private investors aren’t monitored by banking agencies. These loans are typically unsecured with interest rates averaging 17%. (Rates are generally based on a patient’s credit-worthiness.)

What makes these types of loans so interesting from a marketing perspective is that these firms have found a niche and positioned themselves as an expert in this area. They even supply brochures for the doctor’s office. I call this vertical marketing: finding a market and designing your product around a particular need.

Obviously, this could be applied to a variety of industries.

Instead of “fertility finance” you could have “farmers finance” and position your banking products and services around a farmer’s needs. Farmers need financing to buy seeds and fertilizer with plans to pay the loan back when they sell their ripened crop.

Or what about “manufacturers financing” that supplies loans when a manufacturer gets an order knowing it will be paid back by the vendor? Companies like PrimeRevenue in Atlanta, GA, bring buyers, suppliers and financial institutions into a common trading environment that is accessed securely over the internet. They operate internationally in multiple languages and multiple currencies. The finance companies are able to see purchase orders in real-time and the manufacturers are able to get their money sooner.

Niche loans are great, but how will companies be able to find funding in this economy?

One way, called “CrowdFunding,” is currently making its way through the House and Senate. The House has already passed legislation that will allow businesses to use CrowdFunding and Senate Majority Leader Harry Reid announced that the Senate will move forward on bills like this “to spur small-business growth.”

This legislation will enable companies to solicit small equity investments from large numbers of people using the internet. The most they can raise is $2 million, but this is a lot more than a majority of America’s small businesses would ever need.

As it stands, the bill would limit an investor’s investment to 10% of their income or $10,000. So, instead of investing $10,000 in a CD at a local bank that is paying .07%, an individual could “loan” that same amount to a small business and earn a lot more.

This way, the business can get funding much faster than waiting on a bank loan committee to make a decision. And since the internet is so transparent and fast, you’re able to track that company’s health even faster than the FDIC can keep up with your community bank!

The internet is changing the way we all “bank.” We can pay our bills using Google Wallet or PayPal and we’re able to borrow money for our business using CrowdFunding – all without going into a brick and mortar building.

###

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 recent article in the Wall Street Journal talks about how banks that have given away incentives to new customers are now sending those same customers 1099’s.

As the banking industry has become more competitive, especially with bank’s paying very little on CDs and Money Market accounts, many banks are offering gifts that are more valuable than a toaster.

As a result, gift cards and frequent-flyer miles worth more than $600 are causing banks to send thousands of 1099 forms to their new customers! Even though the tax consequences are small, it is causing customers to complain and many are even closing their accounts.

The banks, which include Citigroup Inc., HSBC Holding PLC and the Citizens Bank unit of Royal Bank of Scotland Group PLC, claim they fully disclosed the tax implications to their customers. But will it be enough to keep their business?

Nessa Feddis, senior counsel with the American Bankers Association said that banks tend to be sticklers about tax rules because they operate in such a regulated industry. In contrast, gifts offered by retailers often aren’t subject to IRS reporting because they are classified as a reduction in the purchase price rather than income.

Bank marketing managers should continue to be creative when it comes to innovative ideas to lure potential customers into their banks, but they should also be mindful of the long term consequences.

What seems like a great idea could prove to be a public relations nightmare.

Speaking of 1099’s, I’ve heard a lot lately about banks and mortgage companies that are paying people to sell their homes for less than what they owe. Many banks are finding that it’s cheaper and faster to pay a homeowner who is not making their mortgage payments to do a short sale than it is to foreclose.

What the homeowners don’t realize is that they may get a 1099 for the payment and possibly for the amount that the bank forgives! And remember: the IRS doesn’t forgive or forget. Ex-homeowners could be paying taxes and possibly fines on the amount for a long, long time.

###

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.

Why do you call yourself a community bank?

Is it because your bank’s owners, directors and employees live in your community? Are they involved in the community? Do they belong to the Rotary Club? Do they sing in the church choir? Do they lead a Boy Scout Troup?

If not, why not? Being involved in the community is the only way to really be a community bank and it’s one of the best ways to market your bank – much better than newspaper ads, TV spots or radio commercials. Think about it: what’s more impressive – having one of your bank’s employees coach a community’s little league team or to have the bank buy a banner on the left field fence?

Is it better to have one of your commercial lenders lead a Girl Scout Troup or to just buy a few boxes of their cookies?

If you really want your bank to stand out in the community, get involved. Do some research and put together a list of all the community organizations, clubs and events in your area. Then decide – as a bank – which employee is going to get involved in each group. Make sure you have representation in the Rotary Club, Kiwanis Club, Girl Scouts, Boy Scouts, different religious organizations, homeowners associations, little leagues and city councils, to name a few.

To be a community bank you either have to put bank employees into the community or bring the community into the bank. There are multiple ways to do this.

Does your bank have a large boardroom or training room? Open it up for community meetings. Offer classes and training on marketing, financial planning, insurance, long-term health care and accounting. Local businesspeople would love to be invited to lead these types of events and most would probably sponsor a breakfast or lunch for attendees!

Many in your community are looking for information and expert advice from people they can trust. And they will do business with those institutions that can provide this type of information.

Think of ways your bank can get involved in your community. You’ll be amazed at the kind of response you’ll get. Instead of worrying about all the new “social media” out there, just concentrate on being social!

Have a great example of how your bank is involved in the community? We’d love to hear from you!….

###

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 you know, I spend a lot of time writing about marketing and advertising plans for financial institutions. The most common response I get is, “Great ideas, but where do I start?”  So, today I want to help you put these ideas on your calendar!

January: Start today promoting your IRA and SEP’s. Most people in America are starting to think about filing their income taxes before April 15th and many may be considering these types of products.

February: As the snow begins to melt, many cities hold their annual “home show.” This is a great time and place to promote mortgages and home equity loans.

March: When the weather starts to warm up, boat shows pop-up all over the country. It’s a great time to offer boat loans in all shapes and sizes. The local little league teams will be selling “sponsorship ads” in their programs, so promote the fact that you’re a community bank and there to support them.

April: As we close in on April 15^th, you can run your IRA ads a few more times to get those last minute filers. People are also starting to think about vacations, so you could begin promoting your Travel Clubs.

May: Many high schools and colleges will be holding graduations, so promote the fact that wherever these graduates go in the future, you’ll be there to help. Also this month, since people will be traveling more, it’s a great time to promote car loans. Many people are also thinking about remodeling their home, so promoting home equity loans could be profitable.

June: As kids get out of school, many families go on vacation. Credit cards and debit cards are extremely popular this time of year.

July: As the country celebrates the nation’s birthday, it’s a great time to talk about being a community bank or credit union that supports the local community. Plan a Customer Appreciation Day with a bar-b-que and invite the whole town!

August: As parents begin sending their kids back to school or college, it’s a great time to promote education loans. The local high school will also be selling sponsorship ads in its football programs, so personalize your message for that specific school.

September: Christmas seems to get earlier and earlier each year and September is a great time to start promoting your Christmas Savings Plans.

October: Since Roth IRAs have to be done by the end of the year, October is a great time to begin advertising these. You can also start promoting Health Savings Accounts, since many people will be researching them before the end of the year.

November: Car dealers start promoting their end of year deals – a great time to promote car loans!

December: Take time to say, “Thank You” to all of your loyal customers. It’s also a great time to remind everyone that you are a community bank. Their money stays in their community and any loan decisions are made by people who know them.

Put these dates on your calendar today and get started. You’ll be surprised what a little planning can do!…

###

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.