BankMarketingCenter

I just recently read somewhere that if you’re a community bank and it takes a customer more than 3 minutes to open a retail deposit account or apply for a loan, then you’re losing that customer to challenger banks and money-center banks.

Of course, this way of thinking has been with us for years now. The “digital transformation” and how critical it is to the community bank’s survival is in the news daily, with bankers being constantly reminded that it they fail to offer a totally automated, lightning-fast online banking experience that they’ll surely find themselves on some substandard-digital-banking-experience scrap heap. Is this really where community banks should go? I mean, doesn’t this very notion of fully automated services, such as an under-three-minute account open or loan application process, fly in the very face of what community banking is all about?

Now, that’s not to say that community banks should ignore the data and rely totally on in-branch services. Of course, that doesn’t make any sense. But can a community bank remain a true community bank by encouraging people to rely more on automation and less on personal interaction?

American Banker’s February article, “5 trends sweeping digital banking now,’ provided us with some helpful charts and graphs so that we might better understand where banking is going in the digital age.

According to a Forrester report, adults surveyed said that they would much rather do their banking on their laptop or phone than visit with a person at a branch. Okay, I can accept that; we’ve been heading this way for a while.

Now, according to the above graph courtesy of Javelin, while adults would rather bank on their laptop or phone instead of in a branch, online banking is becoming a bit less popular — and mobile banking more popular — “as Gen Z consumers enter adulthood and reach for their smartphones for financial matters.” The American Banker article then goes onto say that while banking on phones is becoming more popular, the majority of people leave bank websites after looking at one page on their phone. “For bank customers, such a quick bounce would suggest a failed login, perhaps due to forgetting a password. To Mark Schwanhausser, Director of Digital Banking at Javelin, this data shows that banks need to put more effort into their mobile websites. Banks have done a good job making their websites and mobile apps useful for common banking chores, like monitoring balances and reviewing transactions. The next big challenge is to figure out how to make apps the go-to channel for financial matters that require more thought.”

Now, is that really a good idea for community banks? Don’t they already have a “go-to channel for financial matters that require more thought?” I believe it’s called a branch. Instead of trying to do a better job of distancing themselves from potential and existing customers by offering a “get-approved-in-less-than-3-minutes loan application, I think a better strategy might be to focus on the fact that they DON’T offer that kind of service. What happens to the community bank that does, in fact, leave those thoughtful banking decisions to a phone app? How does this make them more competitive with the challenger banks and money-center banks? Call me crazy, but to me, they’re losing a key differentiator. One, in fact, that defines who they are as a community bank. At that point, they’re not competing with the challenger banks… they’ve become one. Then good luck competing.

 About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that topical, compelling communication with customers; the messaging — developed by banking industry marketing professionals, well trained in the thinking behind effective marketing communication — that will help you build trust, relationships, and revenue. In short, build 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.

I’ve said this before, and I’ll say it again:  I’m not an economist. While I certainly look to the experts for information, more often than not I base my opinions on my own “empirical” experiences, i.e., what I observe. For purposes of this article, what I’ve been reading about and experiencing for myself, is the trend in home improvement spending. Now, we all know that home improvement spending has hit record highs over the last eighteen months; up in 2021 by 28% from 2020. The question is, will the gains in household spending continue, especially given the inflationary rise in household furnishings prices we’ve seen lately.

According to CNBC in their February 10 article, “Here is how Inflation is Hitting Everything You Buy for Your Home”:

• Floor coverings: 0.8% month over month, 7.2% year over year
• Window coverings: 1.8% month over month, 16.2% year over year
• Furniture/bedding: 2.4% month over month, 17% year over year
• Bedroom furniture: 1.8% month over month, 13.7% year over year
• Clocks, lamps and decorator items: 2.7% month over month, 6.3% year over year
• Living room/kitchen/dining room furniture: 2.2% month over month, 19.9% year over year
• Appliances: 1.5% month over month, 8.5% year over year

Sure, prices on home furnishings have gone up. But does that mean that folks are done spending on their homes?  I don’t think so. The article goes onto say that “People tend to upgrade home furnishings after they remodel” and we’re just now on the tail end of the greatest home remodeling era in history. To me, and this is proven out I believe by the foot traffic in home furnishings stores, we are now in a “post remodeling” home furnishings boom.

In late November of last year, Furniture Today made this prediction in an article entitled Spruce-up Splurge: “A new coat of paint, the addition of a piece of accent furniture, some updated wall art — it all adds up to become part of a larger redecorating budget for consumers, many of whom plan to spend between $2,000 and $4,999 on their home décor in a year’s time. Our study found that 26% of all respondents — with little variation by age group — plan to spend that amount over a 12-month period beginning in mid-2021. Another nearly 40% expected to commit between $500 and $1,999, again, fairly evenly distributed by generation. Meanwhile, at 11%, Baby Boomers are the most likely to ante $10,000 or more when sprucing up their homes.”

Building material retailers, furniture and home décor retailers, security system dealers… there’s a tremendous amount of money changing hands here. And while the hands accepting the cash represent a wide variety of service and product providers, they all have one thing in common:  It's really not “cash” that’s exchanging hands here. It’s credit.

The home furnishings store aisles are crowded not just with shoppers, but messaging around buy now, pay later programs. Go into any home décor store and you’ll see signs down every aisle, encouraging shoppers to make a purchase now (regardless of whether they can truly afford to or not) and not worry about paying for it until later. The Buy Now Pay Later (BNPL) industry is booming, having generated nearly $100 billion in 2020, and projected to reach $3.98 trillion by 2030.

What does this mean for community banks?  Here at BankMarketingCenter.com, we believe that this is an opportunity for banks to build their business by offering their customers alternative financing… financing that would, for instance, help improve their credit score. That’s because, unbeknownst to many BNPL borrowers, these point-of-sale loans do not routinely appear on most credit reports. That means a good payment record on your buy now, pay later account won't help you build credit. Another “favor” you’re doing your customers?  The Financial Brand points out that “16% of users admit to having had regrets over BNPL purchases. Among the reasons: the purchase was ultimately too expensive; late fees were high; easy credit led to buying something not needed; and finding that some lenders’ policy of not putting BNPL deals through credit bureaus meant the debt did not build credit.”

Why not take this opportunity to let your customers know that you offer the kind of financing that truly makes sense and meets their needs?  Personal loans, for instance or better still, a HELOC, where they only pay interest on what they actually spend? If you’re a community bank and this appeals to you, the good news is that we’ve already created the messaging! All you need to do is visit our site to learn how you can easily customize it with your brand colors and logo, change the copy if you wish, and choose from the thousands of fee-free images we offer. You can do all of the above without any special software of any design skill whatsoever. Our financial industry marketing professionals have already done all of the work for you!

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that topical, compelling communication with customers; the messaging — developed by banking industry marketing professionals, well trained in the thinking behind effective marketing communication — that will help you build trust, relationships, and revenue. In short, build your brand. To view our campaigns, both print and digital, visit BankMarketingCenter.com. Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.

Let me take you back, briefly, to my early days in “the business,” that being the advertising/marketing industry. As I’m sure you know by now, I started my career as an art director at J. Walter Thompson in Chicago.  Not to date myself or anything, but “back then,” as it were, we didn’t use computers.  For some of you younger folk, this may conjure up images of me commuting to work on horseback, but it wasn’t quite that long ago. In fact, computers didn’t come onto the ad agency scene until sometime, if memory serves, in the mid 1990s. So, in actuality it wasn’t that long ago.

Before working on computers, we did everything by hand.  We would literally “cut” type and paste it onto what was called a “mechanical.” We resized images using a stat camera in a darkroom and when the mechanicals were completed, they were sent out to an engraver, who then photographed them and sent the film to the publication for printing.

My point is this: While computers made our jobs easier, and we could be five times more productive, they didn’t make us better art directors.  Computers couldn’t teach us color science, the proper use of fonts, the art of composition, and they certainly couldn’t teach us how to think conceptually when developing a campaign for a client. The computer was just another tool… not unlike the relationship between a painter and their brush.

Ok so much for the “brief” history. I mention this because I see new technologies and “tools” coming online every day. Marketing automation is the big deal now. The goal seems to be to do more with less by using AI and machine learning… in place of human beings.

There’s only one problem.  Software doesn’t think (although we seem to be getting closer and closer to this all the time.). I look out at the template-based design software out there and I think of my early days. A computer is nothing more than a tool. Software companies that are selling “marketing messaging made easy” through off-the-shelf templates are no different. Can a template-driven design program apply Maslow’s Hierarchy of Needs to a print ad or digital banner, resulting in a message that truly resonates with an audience?  Not that I know of; at least not yet anyway.

If you don’t recall our blog from around last November, when we talked about Maslow, we mentioned him because in order to create truly effective, compelling marketing messaging, one must think like a marketer.  And you can’t do that if you’re not totally in tune with Maslow’s thinking.

Again, I’ll be brief!? Maslow was a 20th Century psychologist who figured out that each person has five levels of needs. He called this his “hierarchy of needs.” To illustrate this, he built a triangle. At the bottom of the triangle was the need for basics such as food and clothing. In the middle were safety and friendship. At the top was self-actualization. Why is this important to marketers? When we are developing the marketing messaging around our products, we want to talk to that audience at the very highest level of the triangle, and that’s because the higher up you go in the triangle the more important, and emotional, that level of need becomes. Food and shelter needs, for instance, can be easily met while understanding who you are and why you're on this planet is not so easy.

Marketers use Maslow's triangle because it helps us keep in mind that when we're talking to our customers about products and services, such as IRAs, CDs, and various types of accounts, we can’t simply talk to them in terms of how these products meet a basic need. Instead, we need to put those products and services in the context of those much more compelling, “top of the triangle” needs such as peace of mind, security, an enhanced quality of life…. Establishing a Living Trust isn’t just a way to protect your money… It's a means to provide for loved ones.  A loan isn’t simply a means to make a purchase. It can mean freedom, comfort, enjoyment.  That’s what our marketing messaging must be designed to do.

Yes, a template-driven software application can make the creation of marketing products quick and easy. And they’re usually priced accordingly; fairly inexpensive. But, they have nothing to offer in terms of the marketing “thinking.” Which means that whatever money one might save by using them was not a savings at all but instead a waste.

As always, I would love to hear your thoughts on this subject.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that topical, compelling communication with customers; the messaging — developed by banking industry marketing professionals, well trained in the thinking behind effective marketing communication — that will help you build trust, relationships, and revenue. In short, build your brand. To view our campaigns, both print and digital, visit BankMarketingCenter.com. Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.

What do bananas and baking soda have to do with bank marketing? I thought you would never ask. Let’s start with the bananas…

If I were to hold up a bunch of bananas and asked an audience what they were, most would probably agree they were bananas. But if I held up a green banana and asked the same audience how many would buy this particular banana, less than half would raise their hands. And if I held up a banana that had already turned dark, even fewer would probably want to buy this banana.

As you can see, we are not really selling bananas! We are selling banana skins. People buy bananas based on what the banana skin looks like. In light of this fact, a smart produce manager would market bananas in different ways, understanding that some people prefer ripe bananas, while others prefer green or darker bananas. Perhaps he could market the dark bananas alongside recipes for banana pudding and even place them next to the vanilla wafers. Maybe he could even add a headline like, “Ready for Grandma’s Banana Pudding?” He might market the green bananas to folks heading out on a vacation, with a headline like, “Traveling Bananas – they’ll be ripe when you get there!”

A good marketer can take a product that many people think of as one thing and sell it in different ways.

Now let’s talk about baking soda. This is a product that has been around for over a hundred years and there are thousands of ways to use it. A good marketer might list some of these many uses on the side of the package.

You can brush your teeth with it, put it in cat litter to eliminate odors, clean pots and pans with it, eliminate odors in the refrigerator, use it as an antacid, polish silver with it, or even clean batteries. That’s how baking soda was marketed for years. Then, one day a very smart marketer decided that he would put this same baking soda in a box with “Fridge-N-Freezer” on the front alongside a tagline that read, “30 days of freshness in every box.” He also decided to charge $.10 more per box. And guess what? People started paying $.10 more per box just to have a picture of a refrigerator on the front of the packaging! 

Then this very smart marketer decided that if people would pay more to have a picture of a refrigerator on the front of the box, they might pay even more to have a picture of a cat on the front. After all, people spend millions of dollars each year on their pets. They put a picture of a cat on the front of the box advertising it as “Cat Litter Deodorizer” with “Activated Baking Soda” and starting charging over one dollar more per box! (I love the tagline “Activated Baking Soda.” I wonder who would buy non-activated baking soda? I guess people are willing to pay more for their baking soda to be activated!) This proved to be so successful that before you knew it, baking soda was in every aisle of the grocery store with many different product names and profit margins ten times that of the old-fashioned baking soda in the plain old box.

This brings us to banking. I’m sure you are wondering; what do green bananas and baking soda have to do with banking? Well, it has everything to do with banking! For hundreds of years, banks have marketed and advertised themselves as plain old generic banks. A few got creative and started calling themselves community banks.

Throughout history, we have given our kids piggy banks for them to put their money in and taught them how to take it out only in a real emergency (when it was time to buy some candy!) Most of us have grown up believing that you put your money in a bank and the bank keeps it for you until you need it. Historically, banks advertised CDs and money market accounts to get us to put the money in the bank, and promoted car loans, mortgages, and home equity loans to lend it out – all while making a small margin in the middle.

But the last few years have changed all of this. Now is the time for a really smart marketer to apply the “green banana” concept to the banking industry. We need to realize that every individual and business has different banking needs. For example, a large apartment community collects dozens of checks every day throughout the month. And each day, the apartment manager leaves at noon to take the checks to the bank and go to lunch. But before they go to the bank, they make copies of the checks and fax them back to headquarters to let them know which residents have paid their rent. Some apartment managers might decide to collect the checks and make a daily run to the bank. 

Both solutions are inefficient. A smart bank marketing manager would target those apartment communities with personalized and customized marketing materials that explain how their bank can eliminate the pain of copying checks, faxing checks, and going to the bank every day to deposit them. These marketing messages would talk about the many benefits of remote deposit capture, ACH, and Lock Box services, for example, and even include the apartment community’s name or logo. A smart marketer could even create an additional piece targeting the apartment community’s corporate headquarters, making them aware of the potential liabilities of having their managers driving around town with thousands of dollars at any given time. This marketing piece would also discuss the many benefits of remote deposit capture and how managers, if they utilized this service, they would be able to see images of the actual checks instead of faxed copies. And even more importantly, deposits could be made in minutes without requiring anyone to leave the property.

And, of course, customers utilizing remote deposit capture are a prime candidate for online bill pay and e-statements. In fact, that same smart marketer could develop an “Apartment Banking” product line that promotes all the bank’s services that an apartment community could use. They could even buy the web domain name ApartmentBanking.com for $9.99 to promote their apartment banking products. (This name is still available, but you’d better hurry!)

The bottom line is this: There is no reason you can’t have an Apartment Banking product – just like you can have “Cat Litter Baking Soda.” And this doesn’t just apply to apartment communities. You can target different industries with this same concept. Find out what each industry needs that is unique and position your products around them. Sure, your bank can work with any industry, but you’ll get more business – and possibly better margins – by positioning and marketing yourself in different “aisles.”

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 revenue. In short, build your brand. To view our campaigns, both print and digital, 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.