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.

Years ago, I invested in a flower shop. It wasn’t your typical corner flower shop filled with red carnations and yellow roses. In fact, we didn’t even have a shop. All we had was a van for deliveries.

I researched the flower industry and found that flower shops have very high margins, but very small profits. The main reason for this is the overhead cost and the fact that flowers are perishable. Since flower shops are typically in high traffic areas, their rent is often high. And they have to spend a lot of money on coolers and air conditioning.

We all know that flowers only last so long. If they don’t sell within a few days, you have to throw them away. So the secret, I believed, was to eliminate the overhead and sell the flowers before they wilted.

I hired a floral designer and we sent flower arrangements to all the top law firms, doctor’s offices, ad agencies, and insurance companies in town. This floral designer was also the salesperson. When one of our flower arrangements showed up to an office, our main salesperson got to meet the customer face-to-face. And because they came with flowers, the gatekeeper secretary always let them in!

We would deliver a large arrangement and let them know that we could deliver something similar every week for just $50. We started signing up customers. We would buy the flowers on Saturday from the wholesaler, make the arrangements on Sunday, and make all the deliveries before noon on Monday.

Since we knew how many arrangements we needed, we knew exactly how many flowers to buy. And instead of spending hours designing multiple arrangements, the designer would arrange all of them the same way. The best part was that when we delivered the arrangements on Monday morning, we’d pick up the vase from the week before, saving another $5. Our flowers were always fresh, and we had very low overhead and very high margins.

When you think about it, banks have similar challenges as flower shops. They are usually in high traffic areas, so their rent is high, and the money they collect in deposits needs to be invested in something quickly.

In banking, the secret is eliminating the overhead and utilizing the money instead of letting it sit in the vault. That’s why banks need to stop thinking about expensive branches and start investing in mobile banking.

People are spending hours each day on their phones, doing everything from e-mailing, texting and checking the weather to finding their way around a city or country. Most of these people, I suspect, would love to make deposits using their cell phones instead of driving through traffic to get to a bank.

And, chances are, they would also like to use their phone to pay their monthly bills as well as paying for the hamburger they are having for lunch.

Chipotle Mexican Grill has an app for the iPhone which allows you to order and pay for food right from your phone. You can use the app to find the nearest Chipotle and build your taco or burrito exactly how you want it. You can even include special instructions, like “easy on the beans” before you check out and pay for it. And yes, it saves your order so you can get your favorite burrito every single day without going through the process of rebuilding it every time.

Many banks haven’t even considered mobile banking. The market is still young and the time is now! Look at what PayPal, Ally Bank, ING and other internet banking services are doing.

My 25 year-old son and all of his buddies are using PayPal for almost all of their banking needs. When they all go out to dinner together, PayPal has an app that allows one person to pay the bill and then all of the others in the group can calculate what they owe and send the money to that person instantly. No need for pulling out a calculator or counting quarters, dimes and nickels!

My son doesn’t even open his monthly bank statement he receives from Bank of America. Everything is done on his phone or computer.

All you have to do is look at the sale of smart phones to see where banking is going.

If bankers don’t hurry up and find ways of cutting their overhead, they’ll be just like the local flower shop. They’ll be pushing daisies.

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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.

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.