Bank Marketing Strategy + Ideas

Everywhere you look, the internet is changing the way businesses do business.

The record stores have long since closed their doors; most movie rental stores, like Blockbuster, have gone or are going out of business; and now book stores like Borders are taking a major hit.

At first glance, it might seem that people are no longer listening to music, renting movies, or reading books – but we all know that’s not the case.

The truth is, these familiar stores are being driven out by online companies like Amazon.com, iTunes and NetFlix, which are thriving by delivering books, music and movies over the web. They are serving customers and building a loyal brand – all while saving millions on “sticks and bricks” storefronts.

The sale and marketing of pharmaceuticals over the internet is also growing tremendously. Last year, Johnson & Johnson executives revealed that their company would be shifting away from pitching to primary care doctors in their offices and instead connecting with those physicians over the web.

So what does this mean for the banking industry? Are the same people who are buying and paying for their books, music, movies and medicine over the internet going to look online for all of their banking needs?

To answer that question, all you have to do is look around at all of the people on their phones. We have produced a whole generation of people who don’t do anything without first checking their iPhone!

Even though I grew up with a #2 pencil and a simple notepad, I now use my iPhone’s text feature to check bank balances, debits and deposits. I just type “last” and instantly get a full report on what has transpired in my checking account. I can buy almost anything and pay for it within seconds – all just by using my phone.

So what are these “land-locked” banks going to do? The way I see it, they only have two choices. They either have to go with the flow and embrace internet banking, remote capture and online bill pay, or they’ll need to find creative ways to get their customers and prospects into their buildings.

If they elect to stay in their buildings, they’ll need to offer more than just the traditional banking services. They’ll need to get into the content and education business and find ways to engage and interact with their customers.

Maybe offer classes on a variety of subjects from buying stocks and real estate to choosing insurance and retirement plans. Banks could even teach customers how to research and buy these items online.

Banks need to become the go-to place before anyone invests in anything.

Most banks already have the physical space and every town in America has business experts who would love to share their knowledge and network with other people in the community. And most would do it for free!

Banks need to look at things differently and take action. I had a professor in college many years ago who once said, “Be aware or Beware.”

That bit of wisdom still applies today!

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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.

I’ve written before about the need for financial institutions to train their sales reps.

The reason is this: most banks and credit unions have never had to worry about selling anything. They opened a branch and people just walked in and opened an account.

But as we all know, those days are over.

Today, even people who have bank accounts are starting to use PayPal or Google Wallet to make their purchases and commercial accounts are finding alternate forms of financing.

I’m now getting letters every week from Chase and Bank of America offering me “promotional rate checks” to use anyway I want. I can buy anything I want and pay 0% interest for 12 months. The only cost is a 2% transaction fee.

That’s cheap money – and I don’t even have to leave my office to talk to a salesperson at a bank or credit union!

In order for banks and credit unions to grow, they will have to hire or develop a sales force. And they’ll have to train them because most financial sales folks have never had to make a cold call.

They’ll need to find a good business development expert, like Rick Wemmers at Bank Marketing Pros, or find sales training materials online. I recently came across a very good and inexpensive sales training course at: http://training.sales-getters.com.

The author, Louie Bernstein, used lessons that he personally learned while making millions of dollars in sales. His materials teach you how to prospect and how to turn cold calls into warm calls. He’ll even give you the exact written words to use for every objection.

There are no excuses for not having a trained sales staff. It’s time to get going before your competition does!

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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 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.

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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.

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….

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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.