Posts Tagged ‘American Banker’

Is there a trend towards fewer but fancier bank branches?  An article in today’s American Banker suggests that there is, at least among some institutions. The article, titled: The New Bank Branches: Fewer But Fancier, discusses the efforts of some regional and national banks as they take steps to reposition some of their branches – namely those in high-growth or more affluent markets – as places that are more conducive to conversations and relationship-building with customers.  The decisions are driven, at least in part, by dwindling regular branch foot-traffic:

As walk-in traffic declines, experts say, making customers feel as welcome as possible is central to post-recession growth plans at certain banks. Consumer research indicates that people still want to go to the bank from time to time to open up a new checking or investment account. But they don’t need to wait in line to deposit Friday’s paycheck.

The article goes on to cite findings from a study conducted in July by consulting firm, Celent:

Bankers said that foot traffic is falling at branches and that they expect the trend to continue. Respondents said that branches will still be necessary in five years, but they anticipate that their footprint will need to be 10% smaller by 2015 and feature 20% to 30% fewer teller stations.

While “fancier” may not be the best word to describe these changes, the article draws attention to an important point: Rather than try to increase foot-traffic, which would be a lost cause in most cases, these institutions recognize and are adapting to changing consumer preferences and behaviors.  They realize that consumers still need branches, but don’t necessarily need them as often or for the same reasons as they did in the past.

As consumer behaviors change, delivery networks should change as well.  In many cases, the branch has been ignored as institutions have adopted and introduced new technologies like mobile banking, remote deposit capture and online banking.  But remaining relevant requires that the branch network reflects these changes as well.


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Earlier this month, American Banker published an article by Larry Cohen titled, Viewpoint: Understanding the New ‘Normal’ for Consumers.  While were  “the new normal”  has become a commonly used phrase, both within and beyond financial services,  it seems to hold a different meaning for everyone using it.  In this case, Cohen refers to the new normal as it relates to shifts in consumer behaviors.  He offers the following insights in the article:

“The last two years ended a decade that changed the landscape of financial services. Huge uncertainties exist in the economy and, most importantly, among consumers. People tend to make changes slowly, but inexorably, by almost all measures and in most areas, they are changing. Examining the shifts in the interconnected trends of demographics, products, services, channel use, goals and financial attitudes over the past two decades can yield significant insights into how and why consumers are changing — and where they are headed.

We are all entitled to our own opinions but not our own facts. Some claim that consumers have not changed, but our examination of comprehensive consumer data, integrating trends within components including demographics, financial attitudes, product incidences and use — along with life stages and triggers like life events — found significant evidence of consumer change. And based on our long-term experience analyzing these trends, the shifts pervade virtually every financial need.”

As Cohen suggests, an evaluation of shifts over the past two decades may yield significant insights.  But because consumer behaviors have been impacted so dramatically by recent shifts in the economy, an evaluation of changes and trends in consumer behaviors over the past two years is likely to yield more relevant and timely insights than one spanning decades.

Further, because we have experienced such dramatic change in the past couple years, it’s amazing to think that “some claim that consumers have not changed.”  These people are either not paying attention or are in denial; consumer attitudes and behaviors have changed.  Now, marketers are challenged with what to do next.  The new normal requires us to look at post-recession consumer behaviors (more on the post-recession consumer can be found here and here).

As Cohen suggests, demographics, products, services, channel use, goals and financial attitudes have changed.  It’s likely that they’ll continue to change.  But acknowledging these changes is only the first step.  More important than recognizing the change is the response with which that change is met.  How will you respond?

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This is the question that stuck with me from an American Banker article that ran last week called Advertising Themes Shift as Banks’ Image Suffers.  The article starts:

“The advertising battle raging among banks speaks volumes about the mind-set of the industry and its customers.

Some companies have gone back to basics, emphasizing attributes such as dependability as they try to reassure customers in uncertain economic times. Others have taken a bolder (some would call it negative) approach, seeking to paint themselves as different from their troubled rivals.

Which tone is the correct one inspires debate among bankers and ad experts, since results are often hard to quantify for any ad. But most agree on one thing: Banks must devote a good portion of their scarce resources to advertising.”

The last statement raises a couple key questions:  Should banks really devote a good portion of their scarce resources to advertising?  And, what exactly is a good portion of resources? 

Contrary to what the bankers and ad experts have said here, I’d make the argument that banks are already too focused on advertising.    Regardless of what tone an institution uses in its advertisements, advertising alone is not going to change consumers minds about a financial institution or the industry as a whole.

The article continues with a statement from Maggie Kelly, Vice President of Marketing for the ABA’s professional development group:

“It’s more important than ever to have a strong brand today, because you really have to gain your customers’ trust and loyalty.”

She’s right – it is more important than ever to have a strong brand.  But, while strong brands may be supported by advertising, they aren’t created by advertising. 

This reminds me of a blog Post from Ron Shevlin: You Cannot Advertise Your Way To Greatness

It may be easy to shift the theme or message of an advertisement in response to changing market conditions, but reshaping perceptions and building a strong brand requires attention to other aspects of marketing as well.  Consider the Chemical Bank example cited in the article.   While the award winning ‘Save Michigan’ campaign included advertisements, it also included a microsite, free workshops, and relevant products to support it.  And it wasn’t a quick fix – The Financial Brand covered the campaign more than a year ago here, and the bank’s brand building continues with the latest iteration – the ‘Mich Again’ campaign.

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As consumers, we’ve come to expect that financial institutions offer some kind of free checking account.  We’ve come to expect it because seemingly every institution in the country offers a free account – even if the account is supported by fees.  But there’s been a lot of speculation in recent weeks about whether financial institutions can/should continue offering free checking accounts, and what those accounts will look like moving forward. 

Some recent articles include:

  • In March BAI’s Banking Strategies ran an article called ‘Inflection Point’ in Checking Accounts saying that “Banks need to get creative when it comes to the most basic of products – the checking account – if they hope to offset the huge losses they will experience down the road.” 
  • An article titled Is This the Beginning of the End of Free Checking? was posted on Wall Street Journal’s Real Time Economics Blog on June 18, 2009.  The article highlights a new checking concept from Probity Financial Services called Probity Checking – where customers willingly pay $19.95/month to avoid fees for overdrafts and foreign ATM usage.
  • A few days later, the cover story in American Banker on June 23rd was Free Checking: A Customer Favorite is Re-Examined pointing out that “As scrutiny increases over how free checking works, the business model that underlies what has become an industry standard may have to evolve.” 

Most free checking accounts are the same as they always have been.  The Probity Checking Account is one example of the checking account evolving.  On the other end of the spectrum we’re seeing  BancVue, the company behind a popular free rewards checking program used by many community banks and credit unions, promoting it’s latest effort, Kasasa: a program that focuses on bringing consumers “free checking and savings accounts that give back to you in totally new ways.” 

This comes as BancVue announced that a Surge in Consumer Acceptance Pushes REALChecking Accounts Past Million-Customer Mark – apparently generating over $10 bil. in deposits through its accounts. 

So is free checking here to stay?  It’s difficult to imagine that free checking could simply disappear.  

This is especially true when we consider that BancVue’s accounts alone are used by more than 600 community banks and credit unions in markets across the country.   And these accounts are often perceived as different from other more traditional checking products – which is likely giving some institutions an advantage offering a differentiated product with a higher interest rate.  At the same time, these accounts are really an updated version of the familiar free checking product.

In thinking about Kasasa specifically, it will be interesting to see how consumers perceive accounts under the Kasasa product umbrella as the initiative gains traction.  Where institutions have historically developed unique names for similar rewards checking products offered by BancVue, it appears as though the Kasasa products all carry the same name (i.e. Kasasa Cash).  While it won’t likely be an issue initially, it will be interesting to see what happens when more than one institution in the same market is offering a Kasasa checking account – especially if that account has the same name, but different interest rate at two competing institutions.

At the end of the day, consumers have come to expect free checking.  If offerings do become more limited at a local level, consumers know they can turn to the Internet as the accounts are becoming easier to find online – whether it’s through a direct bank like ING Direct, through account finding services like Kasasa.com or CheckingFinder.com, or other venues.  And while some institutions may find it necessary to eliminate a free checking product because of costs, others are finding ways to add value beyond being free to the customer (i.e. offering higher interest rates). 

While the free checking model we’re used to seeing may not be appropriate for every institution or customer, it sounds like free checking – in some form or another – is here to stay.

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After talking about guerrilla marketing in my last post, I was encouraged to see an article about grassroots marketing in Tuesday’s American Banker.  While the terms guerrilla and grassrootsare often times used interchangeably and are considered the same by some, the article got me thinking about my perceived differences between the two. 

When I hear guerrilla marketing, I think of something that happens to a group of people.  On the other hand, when I hear grassroots marketing, I think of something that happens/spreads within or among a group or people.  Both share the goal of building awareness and influencing people but the approach differs.

This is important because I think a lot of financial services marketers and executives are turned off when they hear guerrilla marketing.  For some, it’s too aggressive, too bold, perhaps too risky.  Because of this, I think many non-traditional marketing efforts are left at the drawing board in favor of traditional and safe marketing efforts like print and radio advertising.

As the American Banker article points out, grassroots marketing doesn’t necessarily mean doing something crazy.  As an example, the article highlights Intermountain Community Bancorp (Sandpoint, ID), an institution that started a grassroots stimulus plan called Powered by Community where executives meet “with local leaders to identify opportunities to finance new businesses, commercial real estate projects and even worker training programs, all with the intention of stimulating growth in the communities it serves.” 

The Powered by Community initiative’s online component is similar to what we’ve seen with Helping AZ from Arizona State Credit Union and From Woe to Whoa from First Independent Bank of Nevada.  I’m sure we’ll see more along these lines from other institutions in the coming weeks.

The article also uses the examples of blog posts and town hall meetings as examples of grassroots tactics.  The idea really just expands on the issue of having conversations with your customers (a topic we discussed previously  here and here) – to include prospective customers/members and the community as a whole.  And in reality, these initiaitves aren’t earth shattering or new.  Nonethless they are important. 

One of the keys here is identifying the local leaders; the centers of influence; the movers and shakers in the community.  This is where community-based institutions may have an advantage over larger regional or national players.  Targeting these people directly, as opposed to trying to reach them (and everyone else) through mass media, allows  institutions to:

  • Engage in two-way conversation:  Consumer uncertainty can be lessened when consumers have answers to their questions.  Find ways to invite questions, listen, and offer direct feedback.
  • Build credibility:  We have all become skeptical of advertisements.  Engaging people in conversation can serve to build creditilbity – once again, it promotes a direct connection.
  • Generate visbility:  People pay attention to the unexpected.  Remember, it doesn’t have to be crazy.

And, perhaps most importantly:

  • Connect with people who have the ability to spread the word and influence others

It’s kind of like politics.  Not surprisingly, the term grassroots started in the political arena.

I say all this because I think marketers will have more success proposing grassroots marketing efforts to the executive team than proposing guerrilla marketing efforts.  Marketers need to be looking to leverage the unexpected and the unconventional.  And in today’s marketplace, where effective marketing is critical, a grassroots approach to marketing is one way banks and credit unions can introduce non-traditional initiatives into the mix…without being too crazy or over-the-top.

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Targeting the younger generations is an issue facing financial institutions across the country; as a result, we are constantly asked: “How do we market to Generation Y?” One tool, which seems to be gaining popularity in every industry except financial services, is the Podcast. When we suggest that a client use Podcasts to educate and attract younger customers – we are usually met with blank stares, utter confusion and the question: “Podcast? – What is a Podcast?”

Essentially, a Podcast is an audio file that you record and post online for others to download; the goal is often times to educate, inform, entertain and/or answer questions as audio – rather than as simple text. This allows your audience (customers and prospective customers) to download the file and listen to it at their convenience.American Banker recently featured Financial Center Credit Union as an example of an institution taking action to target Generation Y – using Podcasts. FCCU has developed a Podcast series called “Talkin About the Benjamins” which addresses issues important to Generation Y, and is reported to receive over 1,000 hits a month – primarily from the younger generations.

The Podcast is just one of the many changes in marketing media and avenues. While Generation Y commands attention, the most successful institutions are well aware that this segment deserves attention, and are willing to take on new initiatives, like Podcasts, to serve them.

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