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….

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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.

If you’ve heard it once, you’ve heard it a million times: mobile banking is going to change the banking industry. Sure, it won’t be overnight. But from all of the research I’ve seen, it won’t take long.

I recently spoke at a Jack Henry Banking Educational Conference, where I held up my iphone and asked everyone what it was. As you can image, they all answered, “a phone.” I then let them in on a big secret. What I was really holding up was a bank branch.

A bank branch that I, the user, paid for and not the bank!

Think about it. As a banker, how would you like to have a bank branch that your customer pays for and spends 24 hours a day with? You don’t have to pay for a building, vault, coffee, cookies, pens, paper or people. And every purchase they make, you are right there with them.

Does this sound like a dream come true?

But the real question is this: Whose bank branch will it be? Will it be yours or your competitor’s? Will it even belong to a bank? Maybe it will belong to a telephone company, internet company, or even an insurance company.

I can’t tell you exactly where the market is going, but I can guarantee you one thing: Unless you start offering mobile banking now and learn how to effectively market it, it won’t be your bank in your customers’ pockets.

People are creatures of habit. Once they begin using mobile banking from one company, it will be hard to get them to switch. So instead of spending millions on bank branches, invest a little in mobile banking. Recruit a young marketing person who lives on a mobile device – someone who can show you the future.

According to comScore, Inc., some 32.5 million Americans accessed mobile banking information on their devices at the end of June, representing 13.9% of all mobile users. The study also revealed that 12.7 million mobile users used banking apps, a notable increase of 45% from the end of 2010.

An analysis of credit card customers’ engagement with various account channels shows users reporting more frequent access through mobile channels than fixed-line computers, with 62% of credit card customers using an app to visit a bank’s website at least once a week. Another 52% percent reported checking-in with the same frequency via a mobile browser.

In comparison, only 34% of users checked-in to their accounts with the same frequency from a fixed-line computer.

“While mobile channels have not reached the same penetration that traditional online channels have for the use of financial services, it is interesting to note that mobile users access their credit card accounts on a more frequent basis,” says Sarah Lenart, comScore vice-president for marketing solutions. “As users continue to incorporate the use of these devices into their everyday lives, financial services institutions can expect to see a more engaged audience grow from their mobile channels.”

One of the many features on mobile phones includes SMS messaging or “texting.” Since this messaging is immediate, banks could use it to alert customers that they have a low balance and could experience an overdraft or that there has been suspicious activity on their account. Your bank could also promote a new higher rate CD or money market account for FREE!

With GPS technology on many mobile phones, retailers can alert customers that they are near one of their retail locations and offer a special promotion that allows the customer to place an order and pay for it instantly. (Hopefully, they’ll pay for it using your bank’s mobile banking application!)

Let me know how your bank is approaching mobile banking. How are you marketing it? What is your strategy?…

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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.

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.