Financial Marketing Solutions

Opportunity to Gain Market Share

2011-02-03T17:23:00.004-06:00

At FMS, we are always looking for ways to separate our client’s brand promise and position from their competitors’. The ultimate goal is to help our client connect with their customers in a way that is relevant, emotional and creates positive experiences. Sometimes, this might require a long-term vision for greater market share and profitability to offset short-term revenue.

In a recent article by American Banker, Huntington Bank was highlighted for offering a 24-hour grace period on overdrafts. It was a bold move from the bank, but has proven to be quite successful thus far. Here is a direct quote from the article—“Huntington, of Columbus, Ohio, began offering customers a grace period on overdrafts in September, in response to new regulatory guidelines that require banks to get customers' permission to cover overdrafts. And if the first few months of the program are any indication of its long-term success, other banks might want to consider following Huntington’s lead.”

I think it is critical to understand that the current disruption in the marketplace is creating opportunity for banks to gain market share. The consumer is more willing to change banks today than they have been throughout our lifetime. Therefore, we recommend that our clients constantly look for ways to build brand awareness so that they are at top-of-mind when consumers are thinking of changing financial institutions. It doesn’t have to be the exact approach of Huntington Bank, or even one remotely similar. The concept, however remains the same. Ultimately, your brand is nothing more than what the consumer “feels” about you. Give your communities reasons to feel good about you during this time and you will have more opportunities for market share growth that will result in greater revenue in the long run.

The window of opportunity will not be open forever. Banks that seize the opportunity now (over the next six to nine months) will show the greater results in the years to come.

What Is The Next Checking Account?

2010-01-07T14:42:00.004-06:00

I believe we are definitely at one of those milestone moments in the banking industry where we have experienced fundamental change and, as a result, banks are reevaluating core products, services and technology. One product that has become more and more important through this change is the basic checking account, which provides low-cost funding for our core deposits.

Over the past several years, we have seen the checking account go from the club account to the relationship account to free checking to reward checking. As core deposits are becoming more coveted these days, the big question is “What is the next checking account?”

The question becomes even more challenging because the change is not the result of a standard progression of product development that occurs over a lengthy timeframe due to the natural evolution of the marketplace but rather development as a result of major economic and sociological shifts that have been abrupt and sudden. We have experienced radical changes in consumer preferences and behaviorism as well as unparalleled legislation, impacting bank strategy, account economics and profitability models.

One of the benefits of recession has always been innovation, and this recession has been no exception. The banking industry has had many technology products and services in waiting; the financial squeeze of the recession has accelerated adoption of these products and services due to the efficiencies they offer in operations and the benefits they offer to the customer.

For example, mobile banking is no longer out at a distance but rather here and ready to launch mobile payments. Remote deposit is no longer limited to small businesses; it is now for consumers and can be facilitated through the mobile phone. Online applications and funding are not just for ING Direct but rather will be a part of all online banking centers. Personal financial management tools will no longer be limited to just mint.com and the cool PNC Virtual Wallet but rather an integral and fundamental part of the banking relationship as customers look for a financial ally. These are all major developments that impact the entire banking relationship and should impact the way we view the next checking account.

So how do we get more core deposits? What is the “next checking account” and what will it look like?

As a result of a lot of research on this subject, I feel pretty confident that it will be different than what we have seen over the past 10 to 15 years—something more highly responsive to changing consumer preferences and the escalation of technological adoption among banks.

It will not be the club account because the majority of people are just too smart to pay a monthly fee for an account that offers items that are now free at most banks, rarely used and have very little perceived value to the average on-the-go customer (anybody can book travel online at a discount).

Some form of a relationship account will still be valuable to an upper segment of the marketplace (that will be a small niche for most banks). Yet, this account will be much more technology loaded, and will rely less upon the personal banker and more on the efficiency of online tools and personal financial management tools.

The entire model of the free gift + free checking account will have to be reviewed due to the account economics. No longer will banks be able to afford to subsidize marginal accounts (estimated at 40% on average) due to the lack of NSF fees from new regulations. Therefore, free checking accounts will need to be restructured to offer the “free” benefit to the customer in exchange for certain usage behavior (i.e. bill pay, e-statements, direct deposit or mobile banking) that lowers operational expenses, increases average balances and increases retention. Otherwise, free checking will only result in a negative margin for the bank.

Reward checking (primarily a BancVue product) has had good success over the past few years, primarily due to an above-market rate to get the attention of the consumer. Some of the presuppositions of this account are accurate. They encourage the customer to adopt certain service behaviors for the premium rate. As a result, the bank gets the benefits mentioned above in an effort to justify the premium rate. I think there will still be a market for this product (primarily the same market that wants great CD rates), but the changing consumer preference for greater simplicity and greater transparency will hinder the effectiveness of this product moving forward. The industry will need to move away from the “fine print” perceived as hidden terms or bait-and-switch offers to a more direct and simpler presentation of a checking account.

So, what is the next checking account? Well, I believe the next checking account is evolving to be more of a core banking product than just a core deposit product. As we move forward, the term “checking” and the idea of checking will continue to dissipate. The customer and the marketplace are comfortable with these terms, but they will eventually give way to alternative terms that refer to the product and the brand and not the idea of checking.

Therefore, the next checking account will not be called a checking account at all, and it will be designed around customer preference and the priorities of convenience, technology and simplicity.

While convenience has always been a factor for a banking relationship, the idea of convenience is rapidly changing. Proximity to the branch is not as important as it once was, and geography is becoming increasingly irrelevant. While brick and mortar will always exist and banking hours will still be important to the customer, convenience will have more to do with technology than it will anything else.

Technology will be a primary factor to the new core banking product. It will not only include the basics of internet banking with bill pay, direct deposit and e-statements but much more. Mobile banking with e-alerts and mobile payments will rush to the forefront as important to the consumer. Consolidated and aggregated account information combined with personal financial management tools will be required alongside the ability to customize and personalize online interaction with the bank.

The new core banking product will also require simplicity in communication. The marketplace has long felt that banking products were complicated and that there was too much fine print in the product offerings. Free didn’t always mean free and rewards were not always rewarded. Therefore, moving forward, product names and offerings will need to be more consumer-friendly and easy to understand. They will not possess pages of disclaimers on the product but rather short and simple statements that can be easily understood. They will no longer be unilateral in development but rather bilateral as the customer communicates through social media what they want and like. However, simple and straightforward will not mean boring, plain and vanilla but rather innovative and creative. The best creative concepts will always be the most simple and easy-to-understand ideas.

So, what is the next checking account? Well, it will not be a checking account but rather a core banking account. It will be an account designed in collaboration with the customer. It will be an account that is convenient, has the latest technological services and products, and is very straightforward and simple to understand. To create that next checking account, don’t. Create a core banking account by listening to your customer, keeping up with technology and keeping it simple to understand.

Mobile Banking is on the Move

2009-08-10T14:46:00.009-05:00

According to the January 2009 Online Banking Report, a projected 7.5 million households, which represents about six percent of total U.S. households, are expected to use some form of mobile banking by the end of 2009. By the end of 2010, 108 million consumers are expected to use mobile banking for functions such as receiving mobile financial alerts, monitoring account balances, viewing statements and transferring funds between accounts. Consumer use of mobile financial services is projected to one day surpass the numbers of those accessing online banking services through Internet-connected computers. What does this mean for your bank?

Mobile banking provides a new way for banks to communicate and interact with their customers. One of the biggest drivers for adoption of mobile banking is the sophistication of the devices that consumers use. A recent study from comScore, Inc. stated that the increasing adoption of Smartphones and rapid development of mobile applications, AKA apps, has created a fertile environment for the acceleration of mobile banking. Even though the device is a key factor, age cannot be ignored. According to a U.S. Mobile Banking survey, 50 percent of Generation Y respondents, AKA the Mobile Generation, indicated that mobile banking would be somewhat important to very important in choosing a financial institution. Even though Generation Y does not bring a lot of revenue to banks quite yet, they will one day soon. By 2018, Generation Y will represent 28 percent of the U.S. population and earn $3.39 trillion in income according to Javelin Strategy & Research.

On Friday, July 31^st2009, the 1,000^th iPhone finance application was added to the Apple App store. These 1,000+ applications are just the beginning for the finance category. Mobile technology is advancing every day. According to NetBanker, the number of applications over the next few years will likely grow to well over 10,000 as more banks and credit unions develop apps of their own.

Even though mobile technology is advancing every day, the United States and Europe remain several years behind many parts of the world when it comes to implementation of mobile banking and mobile technologies. In Japan, for example, 40+ million active handsets are capable of making payments at the point of sale. Imagine going to a grocery store and paying via your mobile device. In the near future, the U.S. mobile device will gradually morph into a payment device used for both remote and direct point of sale payments.

Mobile banking is and will continue to evolve into so much more than just accessing online banking via a mobile device. People are now downloading applications that allow them to make transfers between accounts without visiting a Web site, signing up for SMS alerts to notify them when they have a low balance, depositing checks, and much more. Banks need to view mobile banking as part of their overall marketing strategy and select a mobile solution that works best with their core system.

When selecting a mobile financial service solution, we recommend that you follow the following criteria:

A solution that offers easy enrollment for your current and potential customers. Mobile banking is becoming popular because it is the epitome of convenient banking. We like to call it, being present at the “Moment of Relevance.” Signing up for the service should be a convenient and painless process for your customers as well.

A solution that has the ability to develop Wireless Application Protocal (WAP) browsers, Short Message Service (SMS) alerts, and applications for Smartphones. So many solutions only offer one or the other. Mobile banking has many elements and should encompass all three mentioned. The main use of WAP browsers is to enable access to the Web via a mobile device. A WAP browser also allows for easy readability of the site’s content on the smaller mobile screen. SMS allows for the interchange of short text messages between mobile devices. For example, SMS alerts (text alerts) can be utilized for balance levels and/or statement availability. Apps used on Smartphones refer to useful software that can enhance the experience visitors have with their bank’s services via their mobile device. To access the app, the visitor would have to download it to their Smartphone device. The application would then allow the visitor to check account balances, transfer funds, make deposits, locate an ATM, etc.—all directly from their mobile device.

A solution that offers seamless integration with your core system. Your core system might offer a mobile financial service of its own.

A flexible and modifiable solution with comprehensive functionality. New features will be developed year after year. The mobile solution you choose should be adaptable to technology advancements as they are made.

A secure solution. Your customers have to know that their information is secure, especially when making transfers and deposits via their mobile device.

Mobile banking is on the verge of exploding as consumers increasingly regard their mobile device as a single solution for communication and everyday needs. Convenience is key in today’s society. Consumers want what they want, when they want it. Mobile banking provides banking options at the moment of relevance. Now is the time to take advantage of this imminent service and embrace the opportunities that mobile banking has to offer. After all, isn’t being top of mind always the goal? What better way to remain top of mind, convenient and relevant than by providing helpful services via a channel that almost every U.S. consumer uses on a day-to-day basis.

Six Tips to Maximize Existing Customers

2009-04-28T13:29:00.013-05:00

A recent Gallop poll study revealed that consumer confidence in banks has hit an all-time low. Only 5% of the population has a “great deal” of confidence in banks, and only 13% has “quite a lot.” However, the same study showed that, while overall consumer confidence is low for banks in general, the average American has more confidence in their main bank. In fact, 25% say they have a “great deal” of confidence, and another 33% say they have “quite a lot” of confidence in the bank where they do most of their banking.

So what does this mean for our banks? Well, the same study showed that 29% of Americans planned on increasing the money they have with their own bank, while only 7% interviewed said they are likely to switch banks at this time. Therefore, the greatest opportunity for banks today is with their existing customers.

True, the current environment is reshaping customers’ financial patterns in new ways we’re unaccustomed to, but banks stand to benefit if they go digging for some areas that might provide opportunities for the bank to thrive. For example, today, there is a heightened opportunity for increasing deposits through additional savings products. (The savings rate in America has skyrocketed from .05% to 5% over the past six months.) There is opportunity for increasing fee income through mortgage origination, nontraditional financial services and upgrades to DDAs. And there is opportunity to reduce operational expenses through the promotion of e-services such as direct deposit, Internet banking, bill pay and e-statements. All of these opportunities exist without having to pay the cost of acquiring a new customer. Therefore, banks should be investing more marketing dollars into their own existing customer base for the greater return on investment.

Innovation can occur during what looks like a prolonged crisis. What are you doing to reach your existing customers? What strategies have you put in place to increase products and services tapped by your own customer base? Following are six keys to maximizing the marketing opportunities with your existing customers:

Product and Sales Training: The first place to begin gaining ground is with your own employee base. This is the time for your people to truly understand the products and services that the bank has to offer and recognize how they can better meet the needs of the customer during this stressful time. According to a one study, CSRs only knew 39% of the bank’s products and services while the customer walking in the door already knew 36%! Product knowledge and training increases confidence among your employees, empowering them to ask the right questions and probe to meet the customers’ needs.

Retail Merchandising: It is important to create a retail atmosphere within your bank (according to the framework and guidelines of your brand)—an environment that invites conversations and service opportunities. Evaluate your lobby and drive-thru facilities for placement of posters, banners and brochures. You want to be able to suggest to the customer other products and services that might meet his or her needs. These messages should be timely and creatively presented. Also, make sure your placement of these messages is most visible after a customer has completed their transaction. A recent study out of Britain showed that the average customer is mentally preoccupied before making a transaction, but not so after the transaction.

Web site: Your Web site is the premier, 24-hour point of contact for all of your customers. Use the opportunity to feature rotating flash messages/banners on your site that are timely and allow the customer to engage and interact with your brand, clicking through for more information. Also, it is critical that you provide the customer with the opportunity to respond and act at the “moment of relevance.” If they are interested, then you need to give them the ability to fulfill that impulse and desire immediately. People need to be able to go to your Web site and easily sign up for Internet banking, sign up for e-statements, open a new checking account, fill out an application for a mortgage and make contact with a banker. Your Web site is a touch point for your brand and a round-the-clock branch; use it to enable your audience to “pull” information they want and need toward them.

Direct Mail: From the many focus groups we hold with customers across the country, we consistently hear that they wish their bank communicated with them more frequently about special offers or products and services that could help them! Don’t miss this easy opportunity. You should be able to capture data on your existing customer base and build a “most-likely next product” profile for direct mail. Existing customers should be receiving timely and regular messages from their banks. These offers should give the customer the opportunity to respond 24-hours a day through an online resource. You can also take advantage of existing postage by inserting stuffers into outgoing statements. Yes, many people will throw them away, but it is still one of the most practical and cost-efficient mediums to reach your existing customer base. You may want to even include a landing page on your direct mail pieces to better track your efforts.

Interactive Media: There are tremendous opportunities to reach your customers through e-mail. Make sure that your CSRs are capturing e-mail addresses at the time of an account opening (permission based), and then use those e-mail addresses to build e-mail campaigns with specific landing pages. These landing pages can provide both information and application capability. Also, the real advantage to e-mail marketing is the capacity to monitor activity in real time and know exactly who has clicked through on what promotion. This allows the marketing department to respond within 24-hours to all those who have shown interest but may not have acted upon it yet. You might also consider building social media pages so that your customer base can communicate with you. Social media allows you to hear more honest thoughts from the customer and gives you the capacity to adjust accordingly.

Calling Programs: This is a little more old-fashioned, but always effective. Your commercial and business calling officers should always have a “top 50” list of customers (existing and potential) that they are working. There should be a calling program that combines letters, phone calls, personal visits, leave-behinds and follow-up letters. According to our focus group studies with business customers around the country, business owners want more visits from their banker, and they are more responsive to giving the bank additional business when they are visited. Get out of the bank, and good things can happen.

Banks all around the country are asking, “Where are the opportunities?” The greatest opportunity for your bank is already in the bank. Your existing customers can provide the steady deposits you are looking for, greater fee income and lower operational expenses through the adoption of e-services. Adjust your marketing strategy to more aggressively take advantage of this opportunity.

> Learn more about how Financial Marketing Solutions can help discover your bank's opportunities.

Where are the customers?

2009-04-16T14:18:00.010-05:00

Since consumers are spending more and more time online, particularly younger audiences, a strong bank must have a presence offline and online. Marketing is moving from a transaction-based effort toward an interactive online conversation, which allows active participation with your target audience.

With traditional forms of marketing, we must rely on pushing our content toward where we expect your audience to be; but interactive forms of marketing enable your target audience to actually pull your content or product toward themselves when they are interested in learning more about it, via search, blogs, e-mail, social networks and other online channels.

Interactive marketing can also be tracked and measured with online analytics programs, enabling you to track metrics such as: unique visitors, average time on site, page views per visit, bounce rates, top exit pages, traffic sources, top content and more. With interactive marketing, we can also constantly test new messages and creative concepts. We can see what drives our audience to respond and what inspires them most; and if something doesn’t seem to appeal to our audience the first time around, we can test, test and test until we get it right.

Therefore, as you look at strategically building out a marketing plan for your bank, think cross-channel marketing that coordinates the best of traditional media in conjunction with interactive services that reach people at the moment of relevance. Following is a list of key elements to consider in your marketing plan this year:

Search Engine Marketing (SEM)
- The practice of buying paid search listings in any given search engine. Most often referred to as Cost-Per Click (CPC) or Pay-Per-Click (PPC) advertising.
- You can build and manage your PPC advertising campaigns across various search engines.
- 77% of Internet users search daily, 38% search 4 or more times daily.
Search Engine Optimization (SEO)
- The practice of improving the technical, design, content and marketing aspects of a Web site to achieve optimal volume and quality of traffic via the natural/organic section of search results.
- You will want to optimize your Web site in order to achieve more prominent search engine rankings.
E-mail Marketing
- Using email to distribute your marketing message.
- You can create, send and track your email marketing campaigns with online dashboards so that you can see exactly who opened your emails, clicked through, and went to a particular landing page or web site.
Online Display & Contextual Advertising
- Formatted ads that typically include text and images.
- You will want to do some research to determine where display and contextual advertising is right for you.
Online Video Advertising
- The delivery of either pre-roll, overlay or click-to-play ads that appear during video playback.
- You will need to decide where and if online video is right for your brand.
Social Media Marketing (SMM)
- Marketing that refers to a collective group of Web sites and online channels whose content is primarily published by users. Social media is intended to facilitate communication and interaction between peers and public audiences. (Facebook, Twitter, My Space, Linked In and YouTube).
- Now is the time to “jump in” and position your bank with an ever growing market. You will need to determine the social media channels that would work best for your bank.

Marketing has never been more targeted, more measurable, more precise, more affordable … more perfectly controllable. Interactive marketing opportunities enable you to engage with your target market in real time, and connect with them in the “moment of relevance”—that key point when they are searching for you and your services. Strategically, this could be so impactful to your organization right now, giving you the opportunity to highly target and measure your efforts through interactive media. These efforts will also help maximize your traditional marketing efforts. The result will be a consistent brand message built across all marketing channels.

> Learn more about how Financial Marketing Solutions can help you with Interactive Marketing Services.

Six Key Words for Banks in 2009

2009-02-03T13:31:00.003-06:00

Capital, credit quality, liquidity, and non-performing assets are definitely high-profile terms that we hear a lot in the banking circles these days. However, as your bank tackles the challenges of 2009, keep in mind the following six key words that can enhance your ability to succeed in gaining market share, picking up core deposits, and ultimately enhancing the bottom line for the bank:

Stability. We all understand the environment we are living in and the tremendous media that is focused on the banking industry. Unfortunately, so much of that media is looking for a story or a conspiracy somewhere. As a result, we get stories about Wall Street “Bank” bonuses, banks not lending (even though lending is at a record high), or banks closing (three more this past Friday). Therefore, it is critical that you continue to communicate a message of stability and strength to your marketplace. Don’t begin to think that your customer base and market got the message after a few ads. You need to structure your entire organization around the message of stability, communicating the message internally to your people so that they are confident in communicating that to the customer. You also need to communicate a stable message externally through speeches at local club luncheons, press releases, sponsorships and advertising. A good example of this effort is in the recent SunTrust campaign that uses the theme “Live Solid. Bank Solid.” watch video

Customer: While this might seem to be an obvious word to focus on for most banks, I would suggest to you that it is not. Since the economic crisis has begun, most banks have turned inward to focus on their own problems; when communication is made to the marketplace, it is usually about us, the bank. Look at us. Aren’t we strong? Aren’t we stable? Aren’t we good? It is critical that banks get outside of themselves a little bit and connect with the people on the streets. Look for a way to let people know that you understand they are struggling too. Look for a way to reach out and help. Look for a way to educate and lead during these times. As a general rule, if you think about customers and how you can meet their needs, your needs will eventually be met.

Savings. There is no doubt that Americans have been living above their means for many years. However, our current economic crisis has sent a loud wake-up call to most Americans; as a result, there is a new attitude about saving money. In January 2005, the individual savings rate was .05 percent, but in January 2009, it shot up to 2.8 percent. The present situation has taught us to go back to the basics and save for a rainy day. However, in reality, a lot of people are new to the concept of savings. Therefore, it is a good time to reevaluate savings products and educate your marketplace on the many options that are available to meet the needs of your customer base. Look at it this way: if Sears can successfully bring back layaway, you can bring back all kinds of savings products—from passbook savings to children’s savings and Christmas club accounts. There is tremendous opportunity to gain market share and core deposits through the promotion of savings.

Value. In just about everything I read from leading marketers, the key word for 2009 will be “value.” People are strapped and concerned about the future. Since they are setting aside more money in savings, they don’t have as much money to spend. Therefore, people are thinking more about the value of their purchase and if they are truly getting their money’s worth or not. This is so easily seen from the retail report for 2008. While most retailers were posting losses for 2008, Wal-Mart recorded a 17.3% gain in revenue due to the position of value. The marketplace understood the position and believed it; as a result, Wal-Mart increased sales through the message “Save money. Live better.” Therefore, without compromising your brand, look for ways to communicate value to the customer in the form of rewards, loyalty, relationships, benefits/features, convenience and control. Some of your greatest opportunities in 2009 will be through cross-selling existing customers with value-added products to increase retention and share of wallet. Don’t be afraid to try new things this year. It might even be a good year for old-fashioned coupons.

Brand. It is going to be a challenging year for all banks, and as a result, banks will need to communicate a variety of messages. However, it is important that, more than ever, you stay “on brand.” Your organization’s brand is more than just an ad campaign or slogan. Your brand represents the core values of your organization, your philosophy, passion and purpose for existence, and a message that resonates with the marketplace in a way that is relevant, emotional and creates an experience. Your brand is a combination of who you are and what the marketplace feels about you. Stay in touch with the marketplace through focus groups studies, town hall meetings, surveys and meetings to understand how your brand is being impacted by the current economic situation. It is critical that you continue to learn how the market “feels” about you. Then, with a clear understanding of your brand, tell your story with each of the other five key words in mind. However, tell it only as you can tell it, and avoid the temptation of telling it like someone else. Know your brand … know who you are and then be true to that brand for greater distinction and differentiation in the marketplace.

Metrics. The days are long gone when we can just throw money to marketing for the purpose of something that looks good or sounds good. Yes, you do need to be creative; and no matter what anybody tells you, there is always going to be an element of trial and error in any marketing effort. However, if bank marketing is going to be successful and more than fluff, it will have be strategically driven and systematically measured. Look for ways to measure your marketing efforts in 2009. If you are focused on brand, you can conduct Top of Mind Awareness surveys every six months to see movement and impact of your efforts. Top of Mind Awareness surveys always mirror FDIC market share reports and are valuable to determining effectiveness of brand efforts. If you are doing product campaigns, set goals and establish a process of determining cost of funds and return on investment. Permission-based email and direct mail campaigns have great potential for measuring results. On average, banks in 2008 reduced their marketing budget by 10% and most likely those budgets will continue to be reduced in 2009. However, establish some metrics for measuring your bank marketing results and you will be in a position to better maximize opportunities in 2009.

It looks like it is going to be another challenging year. As you determine your goals, consider your threats and assess your opportunities, remember to add these six keys words into your strategy. Craft your message to revolve around your stability, your customers’ needs, the savings and value you offer and your unique brand. Then institute various metrics that enable you to gauge how well your brand is performing and your strategies are working.

How to Communicate the Acceptance of TARP Money

2009-01-23T17:27:00.000-06:00

While most banks have already put in place a communication plan for participating in the capital purchase program under TARP, there are some that have not yet. Over this past week, I received phone calls from three different banks asking for direction on how to communicate their participation in this program. Therefore, I thought it might be good to revisit some basic guidelines for communicating acceptance of funds from TARP.

There is a lot of misinformation and confusion concerning the TARP Program. One of the main reasons for this confusion is because the government has not been very clear on their intentions with the TARP program, and they continue to change the rules concerning participation (and reporting). As a result, media has had a field day with the situation, painting participating banks as either failing or troubled banks. However, as we all know, that is not the case. While there is no guarantee from the treasury that participating banks will not have problems, the goal of TARP funds is to assist healthy banks, empowering them to support the recovery of the industry. Therefore, how do you communicate to your marketplace your participation in TARP while emphasizing that your bank is sound and strong?

If your bank participates in TARP, be proactive in your communication. You should be communicating a customized message to four different audiences:

Shareholders: Write a letter to your shareholders stating the strategic significance of participating in TARP and the opportunities that additional capital can provide to the bank in growing and becoming more profitable. This letter can be very strategic, informative and technical because it is going to the ownership base of the bank. Provide them with the detailed and persuasive reasoning they need as well as an explanation of precisely how the TARP funds will be used.

Employees: Communicate to your employee base through an intranet letter, and then follow up with a “town hall” meeting. You want to communicate that your participation in TARP is not a signal of your weakness but rather the opposite. TARP funds are designed to help strong banks weather this economic storm, and your bank will benefit and grow even stronger from the additional capital. You need to communicate strength and confidence so that your employees can share that information to the customer. No doubt customers will ask where the money is. So even if you do not communicate with your employees, they are, in fact, still communicating to your customers; make sure they are communicating the right, intended message.

Customers: You should send a letter to your customer base letting them know that you will be participating in the TARP program. This letter should not get too technical; focus on communicating that you are participating because of your bank’s recognized strength and leadership, not weakness. Highlight the fact that the acceptance of funds allows the bank to attract more deposits, which in turn allow the bank to make more loans (this might help the customer understand that the bank does not make loans from capital but rather deposits). The letter should build brand loyalty and confidence in their bank. Let your customer hear this from you first and not the local press. You may also want to encourage dialogue on the subject by setting up a Q&A page on your website that answers common questions and includes a response mechanism to receive even more information. A transparent attitude will build goodwill and highlight the benefits of the program.

Community: You should communicate to your community your participation in the TARP program through a press release. This press release should communicate that the bank is participating because it is a strong community bank, and the funds will enable the bank to better serve the community even better. You should accompany this letter with interviews with local media and talks at local luncheons. The focus should be on how the bank is strong and how it can more readily meet the needs of the community through participation. Keep the focus on your community and your understanding of its needs, rather than emphasizing the bank. Rather than defending the media accusation that banks are hoarding the TARP money to cover losses, promote your bank’s strengths and TARP-driven opportunities to lend more to the community, sparking new growth and economic activity.

You cannot over communicate on this subject. Given the recent media hype surrounding the TARP program, it is not unreasonable that all of your target audiences would have some questions and concerns. Don’t wait for them to ask, or let the media convey the message for you with their own slant. Be proactive, and keep the message positive. If you communicate clearly and appropriately with your shareholders, employees, customers and the community, you can avoid the misperception that the bank has problems. The net result will be greater confidence in the bank and the opportunity for greater market share as customers are moving money to the bank they perceive to be the safest.

As pointed out and well said by Ray Davis, president and CEO of Umpqua Holdings Corporation, about his own bank’s participation in TARP: “This is important recognition of the strength and stability of Umpqua and our good standing as a strong and healthy financial institution. This additional capital will add to an already successful strategy of supporting the growth of our communities through smart, responsible lending, and exploring new market opportunities.”

Be a Bank That “Gets It”

2009-01-20T09:48:00.000-06:00

We are all well aware of the dramatic nature of the current economic crisis. However, through what perspective are you seeing the economic crisis? Are you seeing it primarily as a banker, thinking of how you will have to cut non-interest expenses to meet certain profitability goals? Or are you seeing it through the eyes of the consumer, thinking how it is affecting their daily lives? The banks that will not only survive the economic crisis but also gain market share are the banks that will find a way to think about the customer and say, “We understand what you are going through.”

This past weekend, I was able to enjoy some great football games. In doing so, I couldn’t help but notice the commercials. Federal Express has a great commercial showing a group of employees standing in an office bundled up over little campfires trying to stay warm during “Nordic Tuesday.” A Fed Ex driver comes into the office and informs the staff that there are other ways to save money with Fed Ex. The commercial finished with the idea that Fed Ex understands you are looking for ways to save money. In other words, at Fed Ex, “We Get It!”

When going through a crisis, sociologists tell us that people want to know that someone understands and that someone genuinely cares for their situation. It is this understanding and caring that makes a connection between the two and creates a bond. That is why so many great relationships have been borne out of struggle and crisis. Well, the same truth exists between corporate America and the consumer today. The consumer is struggling, and they need to know that you truly understand and care. What are you doing to say, “We get it,” “We understand that times are tough,” and “We are here to help you” through these times?

This is a great time for the bank to become more selfless and creative in their communications. You begin by first thinking about how you can help your own employees during this time. It is not a time to cut back on employee expenses and minimize communication but rather the opposite. More than ever, it is time to build internal brand through our most valuable assets; our people. Some companies “get it,” like Home Depot: “Unlike retailers that have been quick to cut costs by slashing headcount or employee benefits in the downturn, Home Depot is investing more in its employees and stores under the theory that employee satisfaction will trickle down to customers.” Let your employees know that you understand and that you care, and they will become even greater ambassadors of your brand message during this time.

You also need to communicate to the marketplace that you understand and care. I really believe that there has never been a better time for a community bank to rise up and be the community’s bank. People are looking for counsel and help; and, as a community bank, you should be stepping forward to do so. Think beyond expected “safety and soundness” ads that just merely talk about yourself, and let them know that you care about their situation. Look for creative ways to either reduce, waive or forgive fees. While this might work against everything you have been taught in banking school, it will go a long way in showing the customer you understand and care. While the immediate result might not be as profitable, the long-term results will be profitable through market share gained during a recession.

In a recent USA Today newspaper, Bank of America ran the following ad:

“For those who are ready to buy, we’re taking steps to make sure people are getting loans that enable them to be successful homeowners. And we’re going to do that by lending responsibly – which means no hidden fees, no surprises, and full confidence in every borrower’s ability to repay their mortgage. You see, we care as much about helping to keep customers in their homes as we do in helping to get them there. If they don’t succeed, neither do we.”

JPMorgan Chase is doing likewise, taking out eight-page, magazine advertisement designed as editorial content that follows the success of four real women who achieved fiscal fitness. The advertisement ends with a Chase checklist that shows readers how to “Stay a Step Ahead in 2009.”

These are impactful and empathetic messages, delivered by leaders who just also happen to be banks (rather than banks who also lead). They build goodwill as well as offer tangible value.

Your bank should also look for ways to provide more understanding and value, such as educating customers on savings through a whole host of products. The national percentage of savings per person in the past has been in the negative. However, since the crisis, the percentage of savings has increased to 2.8% per person. People are now thinking more about savings than consumption; however, it is not something many have experience in doing. Therefore, let the consumer know that you have everything they need to save for a rainy day.

Years of “business as usual” made bank customers complacent and unlikely to change banks unless there was some sort of major reason to do so. Now, with consumers anticipating more bad news related to the economy than good, they have fundamentally changed their mindset and are rethinking just about everything related to finances and spending, beginning with their core banking relationships. This is the time for community banks to capture greater market share, and win over potential relationships with a message of confidence, understanding and value.

People are struggling and hurting, and they are looking at their banking relationship afresh. As a result, money is in motion, and for the right banks, it will be a time of market share gain that will ultimately result in profitability.

Yes, we are in an economic crisis, but it is also a time of great opportunity that will not come again for a long time. Therefore, what are you doing to communicate that you understand the new realities facing today’s customer, that you care and that you are the community bank who is willing to do something about it? What are you doing to say “We Get It?” What are you doing to set the stage for your bank to be the leader once the dust settles? If consumers think that you truly understand them and care about them, you will create a bond with them; a bond that result in greater market share, greater share of wallet, and a greater profitability.

A Response to “Irresponsible” Banking Practices

2008-11-21T11:59:00.000-06:00

It seems like banks have become an easy target in this current economic environment. The government, having bought the right it seems, points blame at the banking industry’s “irresponsibility,” and the media takes the bait. Perhaps it is time for the banking industry to present another side to the debate.

Throughout this entire experience, the media and congress alike have confused the irresponsibility of Wall Street with the solid banking practices of Main Street. Therefore, consumers are hearing daily stories about bank executives making big money while others have lost their life savings, about how banks are hoarding cash, and how banks are responsible for the current credit crunch.

Thankfully, the ABA and state associations are doing a tremendous job of communicating through talk shows and press releases. However, many people in our markets are not hearing those voices. Therefore, it is incumbent upon each bank to be communicating in the marketplace. Following are recommendations on what you can be doing and saying during these times.

Your Brand: In these times, it can be easy to lose sight of your brand and just react to all that is going on around you. However, do remember that you have a brand, and people feel loyalty to brands. If a buyer is loyal to a brand, they are less likely to stop purchasing those services during slow economic times. We actually draw comfort from continuing to see “The Coke Side of Life” messages instead of public announcements from Coke about the economy. Therefore, continue to present your brand message to the marketplace.
Safety and Soundness: You need to continue to let your community know that you are safe and sound. If you have good ratings, publish them in the paper and use them in your advertising. However, do communicate this message within the context of your brand and with optimism. Communicate clearly and often. You cannot over communicate during these times.
Money to Lend: While each bank has different portfolio needs and capacity, it is important, under the current situation to communicate to the community that your bank is lending money in order to support the various needs of your community. Obviously, there are going to be credit issues and concerns, and we don’t want to take on unnecessary risk. However, we do need to let people know the bank is lending money. You might consider doing a series of ads featuring high-profile customers (most likely business customers) giving testimonials of how the bank met their credit needs in order to help them meet the challenges of the current economic environment. In our contemporary culture of Internet and Web 2.0, people are more likely to respond to a consumer message vs. a sales pitch from the bank. Therefore, utilize any equity that you have in your customer base.
Sponsorships: Look for opportunities to participate in local sponsorships that are consistent with your brand. Education, sports, housing, and small businesses are always areas of interest to your community. For example, it is a good time to announce a new scholarship program for local students. Make sure to have press releases, pictures and media kits to get the message out through your local media.
Involvement: It is very critical that your bank employees are out in the community participating in social events. We need to have an officer at every club luncheon, grand opening and anniversary celebration. Make sure to provide your people with the proper talking points on the safety of the bank and the bank’s commitment to serve the community.
Value: According to leading marketers around the country, the key word for this year is going to be “value.” The consumer is moving from materialism to “conscious consumption.” Therefore, within your brand, you will need to show the customer that you provide value. Pay close attention to your existing customer base, and increase your communication to them through various delivery channels of statements, retail merchandising and your web site.

I think we all know that there is not going to be a quick fix to the current financial crisis. As a result, it appears that the attacks upon the commercial banking industry will continue. Therefore, keep communicating, keep participating, and keep your building your brand.

Branding Opportunities During an Economic Crisis

2008-11-12T13:47:00.000-06:00

No doubt, we are all experiencing an economic crisis and challenge as never before. As a result, most banks are making adjustments in loan policies and procedures, deposit acquisition strategy, and watching non-interest expenses. However, let’s not forget the all important element of brand during this crisis.

According to surveys, money is in motion more so than it has been in more than 50 years. And as a result, there is greater opportunity to pick up deposits and relationships if we position our brand properly in the marketplace. Contrary to the reaction of cutting back on non-interest expenses, this is not the time to cut back on putting forth your brand internally and externally.

More than ever, you want to communicate your brand so that your employees feel confident in communicating with the customer, you have a greater top-of-mind awareness during this transferring of funds and the marketplace will feel something positive about your bank. Remember, ultimately, branding is all about what the customer feels about your bank, and in today’s environment, the feeling of trust is very vital. In the US Banker magazine this month (November) the opening line of an article titled Building Your Bank Brand said “In today’s competitive marketplace, branding can be the final factor that affects a consumer’s decision of where to bank.” The author goes on to say, “The degree of trust influences the buying decision more that the product or service features and benefits themselves.”

Therefore, make sure you are communicating and building your brand. You cannot over communicate during these times. Continue to remind your employees of the vision and mission of the organization. Continue to remind them of the longevity and success of the organization. And continue to remind them that that they are the key to communicating with the customer. You will want to communicate through e-mail, staff meetings, newsletters and even town-hall meetings.

Also, you will want to communicate to the customer and the marketplace, reassuring them of the safety and soundness of the bank. However, you will want to do this within your brand and according to your brand message. Avoid the temptation to just communicate a message that highlights the negative aspects of our crisis. Make sure, as an institution and leader in your community, that you communicate a positive message of hope. You want to be an inspiration during this time; if you do so, people will transfer those positive feelings of hope to your brand. Look for opportunities to communicate through mass media, retail merchandising, personal contacts, luncheons, press releases and personal contact (Be very active in the community).

No one can deny that we are going through an economic crisis. However, the present crisis also creates opportunity for the banks that will seek to step forward and lead with their brand. Never has it been more important to define your brand, differentiate your bank from competitors and communicate clearly what you deliver to the marketplace. Avoid getting lost and trapped in a survival mode where you lose sight of your brand, but rather embrace your brand and seize the opportunity in the marketplace.