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Like many of you, I’ve been doing a bit of reading on the subject of SMS marketing. It’s a pretty hot topic. After all, at first blush it seems like an absolute no-brainer for financial institutions and for a whole host of reasons. Take this endorsement of it in The Financial Brand’s article, “The Untapped Power of SMS Marketing in Banking”: “When it comes to direct marketing, no channel is more immediate or impactful than SMS marketing. 68% of people say checking, sending, and answering text messages is the activity that they’re most engaged with on their phones throughout the day. In addition, 82% of consumers say they open every text message they receive.” In a more recent article on the subject, The Financial Brand points out that “by not using SMS text messaging for marketing, you are missing a channel with a 98% open rate and a rapid response rate. Consumers love the convenience and are open to receiving personalized and relevant texts from their bank and credit union.”

It is absolutely true that SMS can be a far more effective way to reach consumers than, say, email. And the stats you’ll find out on the web confirm this. MailChimp says that the average email open rate is around 20% with incredibly effective emails earning open rates scoring between 30 and 40%.  By contrast, according to podium.com, “with SMS marketing you can take advantage of the only channel with a 98% open rate and campaigns that get immediate responses and measurable results.”

There’s no doubt that when it comes to notifying customers of overdrafts, stolen credit cards, late fees, payment reminders, or suspicious activity, text messaging is a great way to communicate that information to customers, AND a far more effective way to do it than emailing.

But does the above constitute real marketing? I’m just not seeing it. At least, not yet.

Marketing is about delivering value and do notifications deliver value? I suppose they do… to a small extent. But true marketing messaging touches on much more; it’s about the why, not the what. Sure, an SMS notification that tells me that a payment is due, or that my credit card is being used by someone at a car dealership halfway across the country, is indeed helpful. But I hardly consider these “personalized” messages, even though they pertain to me and only me. Simply because I’m the only one receiving the message doesn’t mean that it's personalized… at least not in the marketing sense. Where is the emotional connection, which we all know is so critical to effective marketing messaging?

We had a bit of fun with this a while back in a blog about marketing messaging and personalization. The point, at the time, was to drive home just what personalized SMS marketing can be. We talked about a young couple simply relaxing at home when the young man begins receiving a series of SMS messages from their bank. The messages are fairly innocuous at first, 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.” Thanks to personalization, the bank knows they're expecting... even before they do.

A bit of hyperbole, for sure, but you get the point. Personalized messaging must “strike a chord,” as well as a balance between being informative and being invasive.  But it must certainly do more than simply inform. In order to develop that messaging, one needs data; info on the consumer’s buyer journey; the who, what, when, where, why, and how of their brand experience. And the technology can enable the harvesting of that kind of customer data is out there.

Utilizing AI-driven data management tools, a bank has a real opportunity to truly use SMS as a marketing tool. That’s because AI can automatically analyze huge volumes of consumer data and identify user trends and behaviors. Rather than targeting individuals based simply on age and gender, AI gives you the ability to more accurately identify their behaviors and purchase patterns. For example, monitoring an individual’s use of products and services, AI can help predict a future purchase.

Now, with the help of AI, you can deliver a relevant, compelling, and highly personalized message to an individual just at the right moment in their path to purchase. A great way to deliver that message? You guessed it. SMS.

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. Like these November observances, for instance, which you'll find in our portal and will help you get the message out to your customers quickly and easily.To view our marketing creative, both print and digital – ranging from product and brand ads to social media and in branch signage – visit bankmarketingcenter.com.  You can also contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject #bankmarketing #communitybankmarketing #smsmarketing

Ranking Republican Patrick J. Toomey, R-Pa., recently had this to say about embedded financing: “Regulating these products too quickly or stringently would stifle innovation and hurt consumers. This is a reminder that market competition is typically better at helping consumers than the government — whether the product or service is in the financial sector or another category.” 

Toomey went on to applaud Buy Now Pay Later (BNPL) products “for providing credit to people often left behind by traditional lenders, including low-income and young people.” Interestingly, he closed with this cautionary caveat: “…as long as consumers have truthful and accurate information about financial products."

On the other side of the political aisle, we have Sen. Mark Warner, D-Va., who gave us this warning in a recent Senate Banking hearing. “We're now seeing a migration in the non-regulated part of the financial industry. I think we focus sometimes almost exclusively on the benefits and not on some of the challenges. There are reasons that we have regulated financial institutions.”  Warner wrapped up his POV by likening the coming BNPL storm of “emerging technology-based lending products that lack consumer protections” to the 2008 financial crisis.

Embedded financing, as we all know now, allows consumers to pay for a product, often bought online, in a set number of installment payments over a predetermined period; usually four payments over six to eight weeks. And the appeal is obvious. For the consumer, embedded financing provides a “one-stop shop” that makes it easier to access goods and services when and where they’re needed. For the business, embedded financing not only generates more sales but also provides consumer data than can later be used to drive future business.

Embedded financing rose in popularity during the pandemic as lockdowns drove consumers to online shopping. According to a study from Juniper Research, the value of the embedded finance market was $ 43 billion in 2021 and is highly likely to exceed $ 138 billion. According to Oracle’s estimates, the value of the market is expected to exceed $7 trillion in the next 10 years, making it worth double the combined value of the world’s top 30 banks today.

All of this growth depends, of course, on guys like Warner and Toomey, doesn’t it? But, what will drive the decisions around embedded financing and determine the industry’s future?  Will it be the CFPB? The Consumer Federation of America? The Financial Technology Association?  Sorry about all of the questions, but I seem to see lots of questions with very different — even conflicting — answers to them.  And I’m hoping that our legislators are getting better, more consistent data. One thing we do know for certain: The structure of these services has so far allowed many providers to avoid requirements that apply to traditional lending products, including credit cards… or can we even be certain of that?

On the one hand, for instance, just this past month the Consumer Financial Protection Bureau released an 82-page report that will help develop "interpretive guidance or rules" to cover gaps and consumer risks in the booming BNPL niche. The CFPB's market-monitoring exercise began early this year when it surveyed five top BNPL providers — PayPal, Affirm, Afterpay, Klarna, and Zip — and focused specifically on the "Pay in 4" style of loans that are spread over four equal segments, bypassing traditional lending regulations. Skeptical about the real benefits, the agency highlighted questions about whether consumers are accumulating an unsustainable amount of debt, and whether companies are skirting regulations or engaging in unfair data collection. Their three primary concerns are around discrete harms to consumers, data harvesting, and overextension.  Also this past month, the FTC reminded businesses that if they offer embedded financing that they must comply with “the three basic consumer protection ground rules of the FTC Act: 1) Claims must be true for the typical consumer, 2) Consider consumer understanding, not just conversion, and 3) If things go wrong, companies can’t disclaim liability by pointing to others in the ecosystem.”

According to a September rollcall.com article, Rachel Gittleman, financial services outreach manager for the Consumer Federation of America, expressed similar concerns: “We would argue that most consumer protection laws should apply to buy now, pay later, as it's being structured more and more like open-end credit,” she said. “Federal regulators should supervise buy now, pay later providers and ensure that they're not engaging in unfair, deceptive or abusive acts and practices, or unlawful discrimination.”

While there seems to be considerable momentum behind taking significant steps toward regulations, there are certainly opposing points of view that support Rep. Toomey’s. In the same rollcall.com article, Penny Lee, CEO of the Financial Technology Association, supported Rep. Toomey’s POV with this: “Only 4 percent of buy now, pay later users missed at least a payment,” she said, citing a March study by the Financial Health Network. A September poll — not surprisingly commissioned by Lee’s association — found that “94 percent of users said they easily understood the terms and conditions of buy now, pay later services,” Lee said.

Lee went on to say that “BNPL products are also subject to consumer protection regulations, including anti-money laundering, fair-lending, debt collection, privacy, fair treatment of consumers and electronic fund transfers. They are also subject to similar state consumer protection laws.” Admittedly, she said afterward, “in some cases the products may not be considered loans if they’re structured as credit sales or retail installment sales through agreements with merchants selling the goods or services.”

I’m not a betting man, but if I were, I’d be putting my money on a much-transformed, much more highly regulated embedded financing industry in the coming year(s). There seems to be mounting evidence, to me anyway, to support this. I would also bet against Oracle’s prediction of a $7 trillion industry 10 years from now. And I’d place that bet using cash… not a Pay-in-Four loan.

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. Like these mobile banking campaigns, for instance, which you'll find in our portal and will help you get the message out to your customers quickly and easily.

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

At one time — and it wasn’t that long ago, it seems — small banks worried that they’d lose their customers to the larger, national banks. But that’s not the case anymore. For small banks, the threat of losing customers, both commercial and retail, is coming in the form of a two-pronged attack; from the large nationals on one front, and from digital banks and fintechs on the other.

According to a recent Forbes article, “The growing domination of Chime, Cash App, and PayPal in Banking,” a Capstone Advisors study reveals that Americans are moving their primary accounts, i.e., checking, from traditional banks to digital banks and fintechs, such as Chime, PayPal, and Square. “More than a quarter of Gen Zers (21 to 26 years old) and nearly a third of Millennials (27 to 41) now call a digital bank their primary checking account provider. Meanwhile, Arizent recently conducted a survey of small-business stakeholders in a variety of industries that had, on average, 129 employees and revenues of approximately $8 million. What they learned about commercial customers was very much in line with what Capstone Advisors learned about retail customers: Roughly half of the small businesses surveyed said that they use more than one banking services provider on a regular basis. 

There’s good news and bad news.

This, of course, gives providers such as community banks the opportunity, with a foot already in the door with their customer, to build on that relationship. That’s the good news. The bad news is that their competitors, such as the digital banks their customers are also using, have the same opportunity. 

This is what I found most interesting about the Arizent study. While both small business customers and individuals do indeed want more personal interaction, they're happy to have that interaction take place via online chat, video, or phone. Charles Potts, Chief Innovation Officer at the Independent Community Bankers of America, had this to say in the Forbes article. “Many consumers need a banker, not just a bank—and the relationship banking model is at the heart of community banking.” Interestingly, according to the Arizent survey, that relationship no longer hinges on meeting bank personnel in branches. Consumers can “meet” their bank in a variety of ways, anytime, and from virtually (no pun intended) anywhere.

Thanks to our digital transformation in customer service, it seems, today’s banking customer is just as happy (perhaps, in some cases, even happier!) to converse with a chatbot as they are a real person.  This is further supported by a recent report from digital services firm, westmonroe: “73% of respondents to our customer survey said a completely digital experience would improve their banking experience. Our survey confirmed that while banks might be meeting basic digital needs, customer expectations have already moved on from basic functionality to next generation digital experiences.” 

Of course, banks need to continually upgrade their digital banking experience. For me, and from a marketing perspective, here’s a great case for social media and its power to personalize. Yes, for community banks their USP (Unique Selling Proposition) has always been personal service, relationship building, and connection to community. That hasn’t changed. But, something else is changing; it’s the attitude consumers have toward digital experiences.

So, what’s a small bank to do?

Focus on your social media marketing. We now have a myriad number of ways to interact with consumers, socially, and since consumers are increasingly comfortable with social media as a personal interaction, small banks need to take full advantage of social media marketing. The 9-5 way of doing business is gone. Consumers expect information at their fingertips 24/7/365. Thanks to social media, banking customers and their community bank can now communicate all day, every day… through posts, webinars, infographics, ebooks, videos, and more. That communication isn’t simply about products and services, either. It’s about what’s happening in the local community, about the commitment of their employees, the organizations the bank supports, and more… in short, the kind of conversations that digital banks and the big nationals simply can’t have with their customers. And, it’s not pushed on consumers but, instead, it’s offered to them. They choose when they want it, and in what form.

So, can smaller banks find a place where only they can go, one that is safe from the threats posed by the nationals and the Chimes of the world?  Absolutely. And social media will take them there.

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. Like these balance transfer card campaigns, for instance, which you'll find in our portal and will help you get the message out to your customers quickly and easily.

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

This just in! According to an article in the Wall Street Journal just a few days ago, Kim Kardashian will pay $1.26 million to settle a claim she had failed to disclose she was being compensated to promote a crypto, the Securities and Exchange Commission said. The reality-TV star endorsed EthereumMax tokens in an Instagram post for $250,000, in violation of an “anti-touting” law. The settlement includes a $1 million penalty, plus her agreement not to take money for promoting tokens for three years. Celebrities have been cashing in on crypto as an asset aimed at individual investors, and the SEC's announcement fueled speculation about who else may be in regulatory crosshairs.¹

I found the latest news surrounding EthereumMax and Kim Kardashian a bit humorous. Apparently, Ms. Kardashian committed a crime – one which comes with a hefty fine (for most people, but probably not Ms. Kardashian) — by endorsing a product and not disclosing the amount she was paid.

Hmmm… don’t actors get paid to endorse products and services on a pretty regular basis? William DeVane pitches gold. Rosamund Pike endorses some investment product, the name of which currently escape me. Martha Stewart hawks pet food. (Oh, that’s right. She actually went to jail, didn’t she?) One of my favorite actors, the guy from Magnum P.I., sells reverse mortgages.

I guess the real issue stems from the fact that Kardashian endorsed an investment product. But, what about these actors who pitch products for Schwab, Fidelity, and Vanguard? I don’t recall ever seeing a disclaimer at the bottom of the screen that says, “Actor Bob Jones was paid $150,000 for endorsing this product. Beware, he’s simply a paid actor and probably knows less about investing than you do.” I guess the SEC is okay with this because these pitchpersons are not celebrities. Apparently, they’re concerned that I’m more likely to be taken advantage of by a self-proclaimed, reality television “star” in a tight-fitting dress than some guy from Central Casting in business casual.

And what about this? What is an “anti-touting” law? Could that term be any more vague?  Everyone on television, social media, the outdoor boards on the highway, the print media (if anyone is even paying attention to that anymore) is hawking or “touting” something…. And BTW, getting paid to do it. “Celebrities have been cashing in on crypto as an asset aimed at individual investors,” the article says. Like cashing in on selling is something new. And remember Matt Damon’s crypto commercial “Fortune favors the Brave”? I don’t recall any mention of his compensation. Maybe he was never paid. Or, maybe he took his comp in crypto, poor guy.

In explanation, the head of the SEC, Chairman Gary Gensler, had this gem of wisdom to offer… on none other than Twitter!? “When celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.” Wow, thank you, Mr. Gensler. So, perhaps that nearly-one-hundred-grand, “influencer-endorsed” Grand Cherokee isn’t for me after all; it could be that I’m simply being seduced by an influencer/endorser.

Do we know if EthereumMax is even a good product? No. Is it risky? Of course, all investment products are. Is eating red meat risky? One could make the argument that it is. False and misleading advertising has been with us since the first soap commercial aired in black and white on one of three networks. I wish that the FCC was just as diligent about scrutinizing claims about advertised products as the SEC seems to want to be. How many times have you seen commercials for supplements that promise everything from losing weight to becoming “more of a man” that mention, in type at the bottom too small for the average human being to read, that the product claims have not even been reviewed by the FDA?

Mr. Gensler goes on to say that “Ms. Kardashian’s case serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.” Am I a Kardashian fan? Hardly. Do I think that endorsers, simply because they’re celebrities, should be forced to disclose their compensation? No. I take every sales pitches, whether supplements, automobiles, fragrances, or investment products, whether celebrity endorser or just-starting-out actor, with a grain of salt. Maybe a bit more salt when it comes to investments as they’re much more of a “considered” purchase, but a healthy dose, nonetheless.

Ironically, and this is always the case, I now know more about EthereumMax than I ever wanted or needed to… and I never even saw Ms. Kardashian’s pitch.

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. Like these mobile banking campaigns, for instance, which you'll find in our portal and will help you get the message ou to your customers quickly and easily. 

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

¹Cate Chapman.  LinkedIn News.  October 4, 2022. https://www.linkedin.com/news/story/kim-kardashian-fined-for-crypto-ad-6021218/

A national bank recently opened two new branch locations in my neighborhood, each of them a little more than a mile or so from each other.  It got me thinking about brick-and-mortar banks… and do we still need them?

Backing up a bit, think of mobile banking apps and branch banks as products, products that are designed to appeal to very specific market segments and like others, can help a bank generate loyalty and earn a customer for life.

Now, as irrelevant as it might seem, think about the cola wars of the 1990’s… the battle between Coke and Pepsi. Those of us in the ad agency world watched this battle closely; not only was it fun to watch, but there were (and still are) a great many lessons, from a marketing perspective, to be learned from it. 

Here is the battle that soft drinks fight.  Soft drinks, like cigarettes, are powerful brands. If you were an insider on the Cola war-era “Taste Test Challenges,” you learned that often an individual who is loyal to a brand of cola, when blindfolded, can’t tell the difference between their preferred brand and a competitor.  In many cases, taste didn’t even matter. Consumers wear their brand as a badge and are extremely loyal.  I remember reading that taste test subjects, when choosing the wrong brand when tested, said that the taste test “doesn’t matter” and that they would stick with their brand regardless.

Here's what Pepsi figured out. They understood that, when operating in an over-the-top brand loyalty category, that they had to “earn” Pepsi drinkers early and count on their unfailing loyalty in order to grow their brand and outsell Coke.  Knowing that young people “graduate” from juices to soft drinks as they enter teen-hood, Pepsi launched a marketing campaign built on “The Taste of a New Generation.” Coca-Cola, seeing what Pepsi was doing and figuring that their image as traditional and “classic” wouldn’t play well with those kids making the transition from juices to colas, responded as quickly (and in as knee-jerk a way possible) as they could… with a new brand that they hoped would appeal to that same, “new generation” consumer: New Coke. 

Well, we all know how that turned out. They shelved Coca-Cola Classic… or at least announced that they would, with the intention of replacing it with a more youthful brand that could better compete.  And what happened? You don’t see New Coke on the shelves these days, do you? How and why someone at Coca-Cola thought that taking their flagship brand — the then-most-popular cola on the planet — off the market was a good idea, I’ll never know.  Why not simply add New Coke as an extension to their beverage line-up?

Back to banking and branches. Do banks need a killer app? Think of Pepsi. Do they also need branch banks? Think of Coca-Cola Classic. Your younger banking customers, who are the future of your business, will more than likely never set foot in a branch bank… at least not for many years.  In the meantime, your more seasoned bankers, who don’t have the same comfort with phone banking that… their children, perhaps, have?... do love the comfort of branch banking. 

There are, of course, a number of factors that contribute to the opening and closing of branch banks and the NCRC, in their article, “The Great Consolidation of Banks and Acceleration of Branch Closure Across the U.S.,” does a good job of taking a deep dive into the subject.  The economy, legislation, competition, consolidation through mergers and acquisitions, and simply “following the money” are all factors. I realize that this is a complex issue. But when I think of branch openings versus closings and where the industry is going, I can’t help but think of it in terms of marketing. It makes sense to have both. Banks need to market themselves by offering consumers the best of both worlds; Branch banking and mobile banking. Which is not too unlike the thinking behind New Coke and how it was marketed; “the great taste of Coca-Cola with the sweetness of Pepsi.” 

As the younger, “taste of a new generation” banking customer’s tastes begin to change, i.e., they learn that there is more to sound money management than using a mobile device to make P2P payments and check balances, they’ll graduate to that more traditional, “classic” flavor of banking. That reliable, more traditional, brick-and-mortar branch.

As always, I’d love to hear your thoughts.

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. Like these October observance campaigns, for instance, which you'll find in our portal and will help you get the message out to your customers quickly and easily.

To view our marketing creative, both print and digital – ranging from product and brand ads to social media and in branch signage – visit bankmarketingcenter.com.  You can also contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com.

#bankmarketing #communitybankmarketing