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Is the New Inbox the Old Mailbox?

Good news for some of us old-school marketers… direct mail is back!  Unless you’re a recent college grad, you probably grew up with direct mail, as did I.  I don’t know exactly why, but DM holds a special place in my heart; and not just from creating it in my agency days, but from receiving it, too. There’s something about finding “stuff” in my mailbox, even if and when it’s not a personal letter, but an oversized postcard good for 20% off at my favorite retailer.

I think, and I could be wrong I suppose, that most people feel the same way that I do when it comes to getting mail. You know why? It shows commitment. Whether, as I said, a personal letter, a postcard, flyer, or a FSI (Free Standing Insert), the message with mail is that someone (or in many cases, some company), took the time, made the effort, and spent the money to reach out.

So, is DM back? Well, the facts seem to say so. At least according to Vox, and the Small Business Administration it is. “Direct Mail is Hot Again,” tells us why and how. “Print magazines are fading, more and more bills are paid online, and many brands have scaled back on printed catalogs, preferring to funnel resources into website upkeep and social media instead. Yet over the last few years, brands — including hot, digitally savvy, direct-to-consumer ones like Casper, Harry’s, Wayfair, Rover, Quip, Away, Handy, and Modcloth — have taken to targeting customers in the mail.”

Why do these disruptive, online-first companies want to be our old school pen pals? The rise of young, digital brands spending money to mail us stuff speaks to the cyclical progress of shopping trends. A decade ago, companies looking to reach customers would often buy email addresses from third parties. They’d do giveaways and, if existing customers handed over their family and friends’ email addresses, they’d offer discounts too.

In “8 Reasons why Direct Mail is More Effective than Email, Xerox makes this case for direct mail: “The latest data makes a strong case for printed direct mail. Sure, social media and mobile marketing are on the rise. But that doesn’t mean that customers aren’t responding to direct mail or that this channel is losing its effectiveness.” Unlike email, direct mail doesn’t require an opt-in, which means you’re not hamstrung by a third-party email list, or the challenge or getting recipients to opt into your marketing messaging. Direct mail never goes to “spam.” Direct mail tends to stick around in places where it can be seen. Although you may think that people stand over the trash bin when going through their mail, that’s not the case in workplaces. Xerox says that a direct mail piece can hang around someone’s desk for weeks and, more often than not, is read more than once. Direct mail doesn’t need to compete with an inbox filled with hundreds of messages. Most importantly, direct mail appears to lend itself well to B2B messaging, such as financing. “Mailers," says Xerox, “can also include a wide variety of trust-building content not possible (or reasonable) to include in email. Plus, there are only so many things you can do to make email look more important; beyond writing a compelling subject line, for instance, there is not a whole lot. Direct mail offers options like kits, dimensional mail, and unique packaging options that, by their nature, get attention.”

Does DM work?  It certainly does, according to this success story recently recounted in an ABA Bank Marketing article on direct mail best practices. “Consider this example from Liberty Bank attracting new movers to open deposits. Prospects were located in neighborhood settings outside of Chicago, two miles from each branch. A big challenge was conveying to millennials that a smaller bank like theirs could do just as much (and more) as the larger, bigger name banks. On the back of the postcard are printed ATM locations close to the resident’s home. Within four months, Liberty established dozens of new accounts and within five years, revenue from the new mover campaign is estimated at $90,000.” 

Back to what I said earlier. It’s not just the information you convey. Recipients like me, whether conscious of it or not, appreciate the commitment that the sender made to put a DM package together. Give it a try. I bet that your recipients will feel the same way. 

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.

 

 

 

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The Fossil Fuel Industry. A Good Bet for Banks?

Back in the first week of January, President Biden picked Sarah Bloom Raskin to be the Federal Reserve’s top banking regulator, a selection that keeps a Biden promise to improve diversity at the Fed. This week, in a letter published on January 27th, the U.S. Chamber of Commerce is sending the Biden administration the message that it is taking an increasingly visible (and vocal) role in Raskin’s confirmation process.

One of the nation’s oldest and most prominent advocates for the business sector, the Chamber has historically maintained a solid distance from Senate confirmations, particularly when bank regulatory nominees are involved. The chamber’s stance on Raskin makes it clear that the organization sees how Raskin-led reform in banking policy could very well have significantly deleterious effects across the business community.

This relationship-gone-South between the US Chamber of Commerce and the Biden administration is not new news.  The break-up can be traced back, most publicly to this past September when it jumped on the anti-Omarova bandwagon with a letter to members of the Senate Banking, Housing and Urban Affairs Committee outlining Omarova’s shortcomings.. .the notion of “FedAccounts,” in particular. Omarova, of course, withdrew her nomination for leadership of the Office of the Controller of the Currency after considerable opposition from, to be fair, both sides of the aisle, as well as the banking industry.

Just recently, the US Chamber of Commerce penned another letter to the Senate Banking Committee, this one in part criticizing Raskin for advocating that federal regulators “transition financing away from the fossil fuel industry.” The letter went on to provide, frankly, more questions than answers and I found this question, in particular, thought provoking: “Is it the role of the Federal Reserve to direct capital away from certain industries that are politically disfavored or direct capital towards industries that are politically favored?”

A rhetorical question at best, right?  Another question: Is the chamber missing the point?  Ms. Raskin is not singling out the fossil fuel industry simply because it is “politically disfavored.” She’s singling it out because in her opinion — and, as she points out in her May 2020 NY Times Opinion piece, “Why Is the Fed Spending So Much Money on a Dying Industry?” — it’s a bad investment.

Let’s back up a bit. It wasn’t that long ago that Board Governor Lael Brainard told American Banker that the Federal Reserve will subject financial institutions to “scenario analysis” of their climate-related risks. “Scenario analysis,” she said, “should help with risk identification and management as firms account for the physical risk of global warming, such as severe weather events, and the transition risk that will come from changing consumer behaviors and government policies.”

At the time it seemed that the banking industry was warming up a bit to the idea of addressing the challenges posed by global warming.  In one of our 2021 blogs, we talked about how “climate change, and climate risk, present important implications (and opportunities) for banks who can get it right.” And, how according to Forbes, 73% of U.S. banks surveyed are already committed to managing climate risk and promoting the transition to a green economy. “This, they believe, “says the article, “will help them attract both talent and customers.”

So, what happened? Raskin makes the point that we simply cannot ignore “clear warning signs about the economic repercussions of the impending climate crisis by taking action that will lead to increases in greenhouse gas emissions at a time when even in the short term, fossil fuels are a terrible investment. Parts of the industry are awash in hundreds of billions in risky debt. Many fossil fuel companies spent the past decade recklessly expanding production even as they failed to turn a profit. Oil and gas companies now hold $744 billion in bonds and debt, much of it below investment grade or close to it. For taxpayers, shouldering these liabilities is a bad deal. Buying this bad debt is not likely to support the creation of jobs or even ensure that existing jobs survive.”

Should Raskin be thoroughly vetted? Absolutely. It seems, however, that this isn’t about political favor or disfavor. The question here isn’t the one the chamber is asking, that being, “is it the role of the Federal Reserve to direct capital away from certain industries that are politically disfavored or direct capital towards industries that are politically favored?” No, the real question is this: Is the fossil fuel industry a bad investment for banks... and Americans?  Well, we’ll all find out soon enough, won’t we?

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.

 

 

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The Continuing Saga of Banking's Battle with Uncle Sam.

It was a few months ago that this story came to light and we wrote about it; here was Uncle Sam once again using its giant governmental mitt to meddle with the banking system. First, with making the postal service a financial services provider, and then with this notion that it’s a good idea to take banks out of the lending business.

At the time, Alex Sanchez, President and CEO of the Florida Bankers Association said that legislation approved by the House Small Business Committee “included an option for the SBA to originate and disburse direct loans” and that this was yet "another zany idea” that’s been floated out by the current administration.

Well, the saga continues. In a recent Center Square article, “Kennedy warns against proposed SBA direct lending program, Louisiana’s Senator Kennedy talks about sensible efforts to put this to bed once and for all. He, along with several other Republican lawmakers and multiple banking associations, warn against crowding out private lending entities in favor of a government agency. Kennedy and others have sent a letter to Senate leadership, focusing on a critical piece of the story: past abuses regarding singular SBA direct loan initiatives. Just a few weeks ago, Kennedy along with U.S. Sen. Tim Scott, R-S.C., and 18 cosponsors, including Louisiana Republican U.S. Sen. Bill Cassidy, introduced legislation to block the proposed 7(a) practice outright. In a nutshell, their letter leveled this criticism: “The report (referring to the Office of the Inspector General’s report),) estimates that the government-run lending initiative advanced $79 billion in potentially fraudulent loans.”

 When this conversation started, Ian McKendry, a spokesman for the American Bankers Association, was quoted in “Proposed SBA expansion into direct lending irks banks, credit unions,” as saying that his group “wants to better understand why it makes sense to create a direct lending program to compete with banks that are already meeting demand for 7(a) loans. This could have the unintended effect of making it more difficult for some lenders to continue participation in the 7(a) program.”

Well, a few months have passed now and Mr. McKendry is really no closer to getting a “better understanding.” It just doesn’t make sense for the SBA to make direct loans. Unless, of course, we’re willing to see billions of dollars go out to fraudulent loan applicants.  And unless, of course, we’re also unwilling to believe what’s in the Office of the Inspector General’s report, which states: “Additionally, we have found indications of deficiencies with internal controls related to disaster assistance for the COVID-19 pandemic. Our review of SBA’s initial disaster assistance response has identified $250 million in economic injury loans and advance grants given to potentially ineligible recipients. We have also found approximately $45.6 million in potentially duplicate payments.”

Proponents of the provision, known as Section 100502, or the Funding for Credit Enhancement and Small Dollar Loan Funding, are still adamant about not leaving lending with banks. Just a few days ago, on January 12, Hon. Rep. Nydia Velazquez, chairwoman of the House Small Business Committee, wrote on The Committee on Small Business website:

“Since 2020, SBA has distributed nearly $1 trillion in economic relief to small firms. This figure surpasses the amount of money distributed in all other years of SBA’s existence combined. This is an enormous achievement and helped keep millions of small businesses afloat during the pandemic. However, with any emergency effort of this magnitude, problems will inevitably occur. According to investigations, the COVID-EIDL and Paycheck Protection Programs have been vulnerable to fraud. Much of this potential fraud can be traced back to the early days of the pandemic when programs were new, loan volume was high, and the need to get the loans out quickly was the priority. Your report also notes that in 2020, the previous administration “relaxed internal controls,” adding significant stress to the system and creating an environment ripe for fraud.”

Ah, so it was the previous administration’s fault. Isn’t it always? It is, at worst, an interesting story to follow and I can’t wait to see how it ends. Or, should I say IF it ends?

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.

 

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Is the banking industry warming up to global warming?

Financial industry regulators have been warning about the climate change threat for years. Recently, however, the Biden administration’s view on how climate risk will affect regulators’ oversight of the U.S. financial system has come into much clearer focus.

In May, with an Executive Order, President Biden directed federal agencies to put in place the mechanisms that could assess the country’s economic vulnerabilities related to climate change and to begin crafting policies to address them. Then, according to The Economist’s “Could climate change trigger a financial crisis?” the White House issued a fact sheet detailing “six core pillars of its approach to combating climate risk. Those pillars include boosting the financial system’s resilience, protecting citizens’ savings and pensions, making the government’s procurement practices greener, incorporating climate risk in underwriting of government-backed mortgages, and building more resilient infrastructure.”

Many bankers, including those at many of the country’s largest institutions, have acknowledged that extreme weather events, a societal transition to cleaner energy, and other consequences of a warming planet pose significant business risks. At the same time, just how significant these risks are is up for debate, and many are concerned that climate regulations could burden their institutions with a number of new disclosure requirements, tie their hands when lending to certain industries, and even increase their capital requirements.

Back in early November, Board Governor Lael Brainard told American Banker that the Federal Reserve will subject financial institutions to “scenario analysis” of their climate-related risks. “Scenario analysis,” she said, “should help with risk identification and management as firms account for the physical risk of global warming, such as severe weather events, and the transition risk that will come from changing consumer behaviors and government policies. Although we should be humble about what the first generation of climate scenario analysis is likely to deliver, the challenges we face should not deter us from building the foundations now.”

Back on May 20th, the President issued Executive Order 14030, Climate-related Financial Risk. One of the main assignments given to financial regulators was a major report from the Financial Stability Oversight Council (FSOC). Led by agency heads across the government — a 15-member body of federal financial regulators, state regulators, an independent, President-appointed insurance expert, and chaired by Treasury Secretary Janet Yellen — FSOC was tasked with assessing the “climate-related financial risk to the U.S. economy.” 

In response, the Council released its report, which as you can view here, focuses on the options that regulators have in incorporating climate risk into their supervision of the financial system. In it, Yellen says, “financial regulators, financial institutions, and investors need to have access to the best information and data to measure climate-related financial risks.” In it, are the Council’s recommended steps to be taken by member agencies, such as utilizing scenario analysis to evaluate the need for new regulations in assessing climate-related financial risk; enhancing climate-related disclosures for investors; improving the gathering of climate-related data for better risk management; and developing both the capacity and the expertise to ensure that climate-related financial risks are identified and managed. “These measures,” says Yellen, “will support the Administration’s urgent, whole-of-government effort on climate change and help the financial system support an orderly, economy-wide transition toward the goal of net-zero emissions.”

Some FSOC members have already taken action. The SEC has begun to develop more robust climate disclosures for publicly traded companies, including many of the nation’s largest banks. The Federal Reserve Board is focusing on developing a better understanding of climate-related risks and incorporating them into its supervision of financial firms. And, the Department of Housing and Urban Development, working alongside the Department of Veterans Affairs, the Agriculture Department, and Treasury, are working to modify their federal underwriting and lending program standards in order to better address climate-related financial risks to their loan portfolios.

Taking on the challenges that climate change poses to our financial security will take time and commitment. Climate change, and climate risk, present important implications (and opportunities) for banks who can get it right. According to Forbes, 73% of U.S. banks surveyed are already committed to managing climate risk and promoting the transition to a green economy. This, they believe, will help them attract both talent and customers.

So, where does this leave banks? Seems like a lot is being asked here; to do the job, at least in part, of agencies such as the IRS, the EPA, and the USPS.  The climate is changing all right.  The question is, are financial institutions warming up to the changes?

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.