BankMarketingCenter

The CEO of Chime, the U.S. technology neobank company that provides fee-free financial services through a mobile app, just a week or so ago had this to say about traditional banks in an article on cnbc.com: “COVID-19 and the pandemic have just accelerated the trend that was already in motion. There’s an increasing willingness to provide and manage your finances through a mobile app. Particularly for the younger generation, the notion of going in to fill out forms, to get basic financial services is really becoming a relic of the past.”

Which begs the question, if you’re a community bank, what will your community look like in the not-too-distant future?

 By that I mean, is the online community all that’s left for banks? Individuals who seem willing to trade personal data for convenience? Those who would prefer to never consult with a human being, an expert, when it comes to managing one of the most important and difficult areas of their lives? Their finances?

Personally, I believe there is still a place for that “off-line” community… the one surrounding your branch locations, the one that consists of individuals and local businesses who are connected with each other and value that connection.

But, hey, what do I know?  Seems like every time you open a news page in your browser there’s some article about digital transformation, monetizing data, turning branch banks into internet cafes… is that really where we’re headed?  And, should we?

Granted, I wholeheartedly agree with Mr. Britt, Chine CEO, that “the pandemic has just accelerated the trend that was already in motion.”  This finextra article from just the other day included this proclamation from Paul Walker, GM of Q2 BaaS. “Now any bank can have its own Marcus or Chime in a matter of a few weeks.”  Wow, the race to trade one community for the other is really is running full steam ahead.

Further proof is a recent Financial Brand blog about digital banking insights that can be learned from China’s We Bank. The Shenzen-based, digital-only bank has experienced exponential growth since its inception in 2015. How? The cynic might ask this question: Could it be that they are raking in cash not because of a digital banking model worth emulating but, instead, a model that allows them to monetize data and loan money to high-risk individuals without fear of running afoul of regulatory agencies?

Case in point. We Bank has built a business of over 200 million customers by opening accounts with an average revenue per user of around $10 USD.  Their per-account operation cost is only 3.6 RMB, or roughly $.50 USD. And, they can process a loan application in just 5 seconds.  5 seconds!  How is that possible?  Henry Ma, CIO explains it so: “We work with a lot of internet platforms. Essentially, we embed our financial products into our partner platforms. And we also work with our partner platforms and leverage the data and the user base that they have and do a lot of pre-underwriting on the users. When we work with a particular platform, the user will get pre-underwritten and receive an invitation from us. Once the user accepts the invitation, we have already gotten some idea of what kind of a credit worthiness this user deserves.”

“We leverage the data and the user base and do a lot of pre-underwriting…”  Hmmm.  Where does this data to which Mr. Ma refers come from?  Sounds to me a like it might be Big Brother Banking, where your bank, in bed with Big Data Bad Boy, knows everything about you and then uses that information to sell their products (which of course, are products that create the revenue they didn’t generate when they sucked you in with a bait-and-switch offer.)

If this sounds a bit skeptical and cynical that’s because, frankly, it is.

Back to the original point here.  What “community” are digital banks serving and do our true, traditional, local community banks want to go there? The pandemic may have accelerated the digital banking trend, but that doesn’t necessarily signal progress or a direction in which banks need to necessarily go. People need community and connections. Yes, they want convenience, but once this pandemic is behind us, will those digital customers still feel the same way? Perhaps, but perhaps not. I could see the pendulum swinging back the other way with a re-birth of the branch bank. 

And why not?  E-tailers are doing it.  In “Why are Online Retailers adding Brick and Mortar Stores?” DeFi Nucleus Vision says, “Online shopping lacks human interactions. Customers don’t get a chance to ask in-store stylists for advice, it’s a solitary experience and customizations aren’t as easy to organize. Having a salesperson who greets you, tells you what looks good on you, gives you the right size, and offers a better color scheme can help brands build a deeper connection with the customer.”  A “deeper connection.” That sounds a lot like community banking to me.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand.

To view our marketing creative, both print and digital – ranging from product and brand ads to in-branch brochures and signage, visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

It was just less than a year ago (although the last six months have seemed more like six years) that The Financial Brand had this to say about banking and privacy. They pointed to an Accenture survey that found that “20% of banks monetize transaction data by delivering actionable insights and that 75% aspire to do so in the next three years. The consulting firm, which encourages financial institutions to pursue this strategy, also notes that monetizing consumer data is difficult to do well while also protecting consumers’ information.” The survey, according to the FB, also went on to predict that as banks explored this uncharted territory, they must tread lightly to protect the integrity of customer relationships.

How true that is. 

I think it might have been one of those satirical commercials done by Saturday Night Live a while back, I’m not sure, but what I do remember was their lampooning of banks using personal data for marketing purposes.  At one point in the faux commercial, which featured a young couple, the young man receives a series of SMS messages from their bank.  The messages are fairly innocuous at the start but become progressively more disconcerting.  The first text seems ordinary enough: “We hope you’re enjoying the new truck you purchased with one of our auto loans.”  When it’s followed shortly afterward by, “we’ve noticed that you made a large purchase at the grocery store just the other day… having a party?” the couple gets a bit concerned. By the last, they’re totally creeped out: “We have the loan you need when you’re ready to decorate that baby room. Congratulations.” The gag, of course, is that the couple doesn’t know they’re pregnant, yet their bank somehow does.

Granted, this is a bit of hyperbole, but it does point to the fact that monetizing consumer data can pretty quickly run afoul of the consumer’s desire for privacy. Consumers want the convenience of products and services being brought to their attention based on their “buyer journey” and purchasing habits, but they’re definitely conflicted about how much of their personal information is needed to make that happen. 

That’s challenge number one. The other is that Congress is not helping the matter. In the ABA Banking Journal blog, “How will increased privacy regulation affect bank marketing? author Karen Hoffman talks to the challenges that the industry faces in the area of privacy.  “Consumers complain,” Hoffman says, “that their personal privacy is not respected, but often freely share sensitive information when it suits them, especially in the interest of receiving more personalized products, services or marketing. Hence, financial marketers find themselves in a pointed Catch-22 in marketing: hoping to connect in a personal way with customers or prospects, but unable to overstep certain boundaries that would transgress emerging privacy regulations.”

The challenge for banks is twofold.  One, how do they walk the privacy tightrope, using just enough personal data to market products without frightening customers and two, how do they navigate a hodge-podge of regulations?  As Hoffman points out, “the big challenge is the emerging patchwork of state-by-state privacy regulations and enforcement. While many are similar in nature, each has its own definitions of personal data, rights under the law for consumers and operational impact. An institution that operates across 20 states may be looking at 20 different frameworks and bills applying to them and their accounts, some of which are potentially in a state of revision.” Also, while many state-by-state privacy regulations and enforcement are similar, each has its own definitions of personal data and rights under the law for consumers.

As banks continue to move their services online, the issue of privacy will continue to receive greater attention. How big an issue is it?  Opinions vary from “proceed with caution” to “don’t worry, consumers will give you whatever you want if you give them what they need.” While there seems to be differing opinions on the scope of the challenge, and with that a bit of uncertainty on how to proceed, one thing is for certain; your bank shouldn’t be the one to tell you that you’re expecting!

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand.

To view our marketing creative, both print and digital, ranging from product and brand ads to in-branch brochures and signage, visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

What budget is the first to get slashed in an economic downturn?  As we all know, it’s marketing. As a former ad agency guy, I have lived through many a downturn.  We always knew that when times started to get tough, we were the first to lose our jobs… and, when times began to improve, we were always the last to return to work.  There’s an old agency metaphor for spending money in a downturn. We said it was “like shooting at ducks that aren’t there.” Well, right now, a lot of banks are looking to save their No. 2 Steel for another day.

But, perhaps they’re not ready to give up entirely on bagging a few.  I found Bill Streeter’s recent post on The Financial Brand both informative and, well, a bit encouraging; despite that fact that the challenge he addresses is that of “pinched budgets plus tougher competition.”

Why encouraging when we’re talking about an industry being in somewhat of an “unenviable position”? Because I think I can help.  Bill goes on to say: “New marketing technology can bring efficiency, which helps with budgets, but you can’t just snap your fingers to get there. It requires investment in software and talent.”

And I couldn’t agree more.

While a “new marketing technology” deficit is one of them, there are a handful of issues banks face when it comes to marketing in today’s economic turmoil. The Financial Brand interviewed Chandramouli Venkatesan, Market Development Executive in Capgemini’s Financial Services and Capital Markets, who pointed out some of those additional issues. “Multiple touchpoints to execute a campaign, lack of standardization of campaign components and manual handling of data should be solved by a marketing resource management solution,” he said. “The problem is that many of these software tools are out of date.”  He goes on to state that talent is a tougher challenge. “To have an agile marketing team an institution needs a blend of expertise in digital marketing technology, data, marketing, and creative, says Venkatesan. He acknowledges that external help will likely be needed.”

And this is where I think we can help. For those of you who aren’t familiar with bankmarketingcenter.com, we currently work with 20 state banking associations and over 300 banks, helping them address the challenges faced by their marketing teams.  Our partner banks have access to several thousand professionally designed layouts – created by agency trained, financial services industry professionals – that range from social media messaging, online banners and in-branch signage, to print and radio advertising. With unlimited access to millions of Getty Images, as well as the ability to customize copy and colors, banks are able to personalize these marketing materials quickly and easily, saving valuable time and money.  When Jim went on to say that “it is becoming increasingly challenging to deploy modern marketing with legacy talent, skills and mindset… and that most financial institutions will be better advised to partner with specialty organizations to provide the needed skills,” I said to myself, he is exactly right.  And that is what we’ve been trying to do with bankmarketingcenter.com. 

If ever there were a time when you should be making use of every marketing communication tool at your disposal, and being as efficient about the process as possible, this is it. As a financial institution, a trusted institution, you must keep your customers abreast of important economic developments, as well as the products and services that you can offer to help them navigate those developments. And you need to use every available tactic to do so: Social posting, advertising, newsletters, email, webinars, and direct mail.

While there may be fewer ducks to shoot at, that doesn’t mean you stop duck hunting entirely. It means that you just have to get better at it.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand. Messaging that you can customize to meet your needs in just minutes.

To view our marketing creative, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

With the arrival of Covid-19, there’s been quite a bit more discussion about marijuana.  Not just its use, not just the trend toward legalization at the state level, but its potential ability to actually help stem the coronavirus tide.

Back in the early fall, Forbes reported that “cannabis may help in severe Covid-19 cases.”  Since the first outbreaks, cannabis consumers have been wondering whether cannabis use will hurt or help. Over the last months, research has been pouring in.  Unfortunately, like lots of research and data interpretation, the available facts seem to point to two very different conclusions:  Yes, it can help and no, it is in fact, a contributory factor.

The main body of research suggesting cannabis might help those with Covid-19 points to cannabis derived chemical, CBD, as a potential treatment during severe cases of Covid-19.  Researchers from the University of Nebraska and the Texas Biomedical Research Institute first flagged the possibility, pointing out that CBD may be helpful for fighting the Covid-19 inflammation that is often fatal. Unfortunately, some research has pointed in the other direction. A recent study conducted by researchers at the University of Western Australia compared cannabis use in the US with Covid-19 infection rates and found that the two were correlated - with cannabis use tied to an increased risk of the disease.

An industry that’s growing like a weed. (Sorry!)

This is a growing industry that’s comprised of an increasing number of businesses; growers/suppliers and retailers, just for a start. How big a business is it? The pot industry, comprised of MRBs or marijuana-related businesses, is a $50-some-odd billion industry. According to Marijuana Business Daily – I kid you not – the economic impact of the marijuana industry is predicted to reach $130 billion by 2024, exceeding the GDP of 9 US states. Currently, the industry employs more American workers than coal.

Where does this leave banks?

Banks, of course, want to stay in the good graces of regulators, shareholders, insurance carriers and the courts. Visit the American Bankers Association website today and read the “ABA Position” on cannabis and you’ll see that the financial industry could really use some guidance. The site points out that there are at this moment thirty-three states that have enacted laws that legalized the use and distribution and manufacturing of medical marijuana along with 10 states plus DC, where legalized recreational marijuana is now the law. Here’s the rub; “the possession, distribution or sale of marijuana remains illegal under federal law, which means any contact with money that can be traced back to state marijuana operations could be considered money laundering and expose a bank to significant legal, operational and regulatory risk.”

So, again, where does this leave banks? In a bit of a marijuana induced fog, unfortunately. There is currently a tremendous legal risk for banks serving cannabis industry entities and individuals, “as indirect connections to marijuana revenues are hard, if not impossible, for banks to identify and avoid.” Banks are, as a result, hamstrung by a rift between federal and state laws, making it difficult to balance their desire to serve the financial needs of their local communities with the threat of federal enforcement action.

According to the ABA, “(we) take no position on the moral issues raised by legalizing marijuana, but the growing number of states that allow its sale and use raises practical issues that must be addressed. ABA believes the time has come for Congress and the regulatory agencies to provide greater legal clarity to banks operating in states where marijuana has been legalized for medical or adult use. We look forward to working with policymakers of both parties to find solutions that provide the legal and regulatory certainty banks need to best serve their communities.”

In the meantime, ABA Insurance Services, has created a “Cannabis National Bank” webinar that does a phenomenal job of talking through the issues of serving marijuana-related businesses. I highly recommend it.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand.

To view our marketing creative, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

Back in July, we wrote about predatory lending and how, “In addition to the physical, emotional, and economic hardship brought about by COVID-19, Americans now faced another danger… predatory lenders.” Back then, we cited a July 2020 CNBC story entitled, New payday lending rules could leave 12 million Americans exposed to unaffordable payments.  In it, Alex Horowitz, senior research officer with Pew Charitable Trusts’ consumer finance project, said “that by eliminating the ability-to-repay protections, the Consumer Financial Protection Bureau (CFPB) is making a grave error that leaves the 12 million Americans who use payday loans every year exposed to unaffordable payments at annual interest rates that average nearly 400%.”

Looks like the ABA is stepping in where the CFPB wouldn’t.

On October 18, the American Bankers Association called for a renewed effort to address the tremendous number of families without access to banking services who, subsequently, are forced to turn to payday lenders. At the ABA’s Unconventional Convention, President and CEO Rob Nichols called upon every bank in the country to consider offering Bank On-certified accounts to expand access to banking services and reduce the number of unbanked and underbanked Americans. “Despite a strong financial services industry, we know that millions of Americans – and families of color in particular – remain outside the mainstream banking system and are missing the economic opportunities that come from having a bank account,” said Nichols. “By offering Bank On-certified accounts with the help of their core providers, America’s banks can open doors of opportunity to new and returning customers, demonstrating the banking industry’s commitment to financial inclusion.” 

The FDIC has reported that 14% of African American households and 12% of Hispanic households were unbanked in 2019. What do those numbers look like now, in an economy where millions are unemployed?  I hazard to think. And why are these numbers so outrageously high, in particular, among minorities? Some say they don’t have the funds to meet minimum account opening requirements.  Others say that they simply don’t trust banks. 

Bank On is Born

In response to this unbanked and underbanked “epidemic,” the ABA has launched a new initiative aimed at encouraging every US bank to offer ‘Bank On’ certified accounts, which are specifically designed to offer simple access to deposit accounts, online payments and debit cards for those currently outside the banking system.

“With more banks offering these kinds of accounts, we can further expand access to the mainstream banking system and all the economic opportunities that come with a bank account,” the ABA said in a statement.

More than 40 banks already offer Bank On-certified accounts, while the ABA’s website lists 20 banking technology providers that have signed up to facilitate such accounts, including FIS, Fiserv, Finastra, Jack Henry, CSi and UFS Data. The Bank On certification was created by the Cities for Financial Empowerment (CFE) Fund. To be certified, accounts must have low costs, no overdraft fees and online bill payment facilities.

Jonathan Mintz, president and CEO of the CFE Fund, said: “By urging banks of all sizes to join this initiative, particularly community banks, we can welcome millions of Americans into the banking system safely and efficiently. We also deeply appreciate the critical role the nation’s core providers are playing to make it happen.”

Let me just wrap up by saying that it’s this kind of thinking and action that make me proud to be in the banking business.  I hope you feel the same way and will support the ABA in their Bank On efforts.  To do so, you can start by going here, joinbankon.org.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand.

To view our marketing creative, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.