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Brace Yourself for a PPP Loan Forgiveness Frenzy

Let’s start with a seemingly off-the-wall question: What’s the Transitive Law in mathematics?  Why?  Well, contemplate this equation from page 7 of the SBA’s 11-page PPP Loan Forgiveness application:

  1. Enter the annual salary or hourly wage as of February 15, 2020: ______________. b. Enter the average annual salary or hourly wage between February 15, 2020 and April 26, 2020: ______________. If 2.b. is equal to or greater than 2.a., skip to Step 3. Otherwise, proceed to 2.c. c. Enter the average annual salary or hourly wage as of June 30, 2020: ______________. If 2.c. is equal to or greater than 2.a., the Salary/Hourly Wage Reduction Safe Harbor has been met – enter zero in the column above box 3 for that employee. Otherwise proceed to Step 3.

This is just one example of many. It’s no wonder that bankers are more than a bit concerned about what the loan forgiveness future may hold for their institutions, given the complexities and uncertainties that have haunted this program from the beginning. With roughly 4.4 million PPP loans processed for a total of nearly $515 billion, banks need to prepare for what could be a forgiveness frenzy.

In a May 22 article in Bloomberg, “Millions of PPP loan forgiveness requests are about to rain on banks,” several industry leaders alluded to just a few of what they see as the challenges ahead:

“The document is complex, so it will fall to lenders to help borrowers complete it. I would equate this to just as heavy if not a heavier lift to processing the loans themselves. For most lending businesses, you may be doing this full-time for no revenue.” -   Libby Morris, Head of U.S. Operations, Funding Circle Holdings Plc.

In a May 22 article in Bloomberg, “Millions of PPP loan forgiveness requests are about to rain on banks,” several industry leaders alluded to just a few of what they see as the challenges ahead:

“The document is complex, so it will fall to lenders to help borrowers complete it. I would equate this to just as heavy if not a heavier lift to processing the loans themselves. For most lending businesses, you may be doing this full-time for no revenue.” -   Libby Morris, Head of U.S. Operations, Funding Circle Holdings Plc.

“Businesses are still looking for clarity on whether employee bonuses and some health insurance and retirement plans count as payroll.”  -   Joan Vines, a Managing Director at BDO USA LLP

“Many businesses may find they fail to meet SBA terms for forgiveness, which will leave banks with loans to service and customer issues to resolve.”  -   Josh Knauer, General Partner, JumpScale

“Hopefully it doesn’t all come at one time and we can stagger it over a period of time, but I do believe there’s going to be a lot of hand-holding associated with it.” -   Ira Robbins, CEO, Valley National Bancorp

Here is what your PPP loan borrowers are up against; unclear, shifting guidelines and definitions, as well as a daunting, 11-page PPP Loan Forgiveness Application that makes a 1040 return look like a third grade social studies quiz. The SBA also makes it clear in this application that while all borrowers are “eligible,” there is no guarantee that a request will be granted.

Where does this leave lenders? According to Knauer, lenders will have “a massive customer-relations problem with the companies they’re lending to. More time will have to be spent on the phone, more audits are going to have to be done, with a lot of digging into every single line item of expense.”  And Robbins predicts that his bank will need to commit as many employees – 500 out of 3,200 – to deal with forgiveness requests as were needed to process the loans.

Forward-thinking institutions are doing just that; thinking forward and taking a proactive approach to the processing of PPP loan forgiveness requests. These banks are marketing advisory services early in the application process with a view to avoiding, as Knauer puts it, “a massive customer relations problem.”

The marketing communication materials offered by BankMarketingCenter.com can help banks get a message out to borrowers that will stem the forgiveness frenzy tide. First of all, it’s essential that institutions continue to guide their PPP borrowers down the road of forgiveness with frequent reminders of the forgiveness guidelines, which are:

  • Track all transactions for which PPP funds are used and keep all related receipts
  • Keep accurate payroll records so you can show that at least 75% of your loan went to payroll costs. (PS: As of this writing, Congress is considering revising the 75% to 50%. According to Forbes Magazine’s, Good News For Small Businesses: Congress Could Extend PPP Loan Forgiveness Period,” there is enough support in Congress to extend the eight-week period that Paycheck Protection Program loan recipients have to use the money, as well as relaxing the 75 percent payroll requirement.”
  • Keep accurate non-payroll covered expenses, such as payment of interest on mortgage, rents on leasing agreements, and payments for utilities.

Secondly, institutions need to get ahead of the forgiveness process confusion with messaging that helps their borrowers complete their applications. That message could center around a webinar, for instance, that reviews the process guidelines and takes borrowers through their forgiveness application.  It might also, as in the case with the Illinois Bankers Association, tout a partnership with a third-party “forgiveness solution” provider, as recently announced by the association: “After evaluating a number of solutions, the Illinois Bankers Business Services Board has chosen to partner with Abrigo and their PPP Forgiveness & Administration solution… which manages the full lifecycle of the PPP loan, from loan forgiveness calculations to auto-populating Form 3508.”

The forgiveness process is a complex one, but the program will hopefully provide businesses with the funding they need to stay afloat. Is it all worth it, in the end?  Even the SBA seems uncertain. In its Rules and Regulations document, the association offers this assessment: “We anticipate that this rule will result in substantial benefits to small businesses, their employees, and the communities they serve. However, we lack data to estimate the effects of this rule.”



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Their Credit Needs Protection, Too.

About 33 million Americans have filed jobless claims since mid-March. The unemployment rate has skyrocketed to nearly 15 percent, the highest level since the Great Depression, and the U.S. workforce has lost an unprecedented 36.5 million jobs. According to a Fidelity Investments study on Market Sentiment, nearly half of those surveyed said that because the of the demands of work (or looking for work), and home (with social distancing, children at home, etc.), they have not dedicated any time whatsoever to addressing their financial futures. That’s changing, however, as the Covid-19 threat appears to ebb, and Americans begin to focus on a much more optimistic future. 

In “Should I care about my credit score during Covid-19,” author Taylor Moore on nextadvisor.com says, “With unemployment rates at a historic high and a contagious virus on the rampage, it may seem frivolous to think about managing one's credit score at a time like this, but it’s an important component of your financial health that will follow you past the pandemic and into the future. And right now, there’s a lot of confusion about what gets counted in your credit history.”  The phrase “a lot of confusion” could be considered a real understatement, given the amount of confusing, and often conflicting, information regarding credit score management and reporting. As bankers, it’s critical that we, of course, continue to be that expert advisor to our customers, providing them with much-needed financial products and services.

One of those critical services is guidance, especially at this moment, in managing their credit. How should you advise them and, hopefully, bring some clarity to what they’ve seen and heard?  Here are a few things:  

  1. Monitoring credit closely: Free weekly credit reports are now being made available by the major reporting agencies and can be accessed simply by visiting AnnualCreditReport.com. Whether or not they’ve missed any payments, staying on top of credit reports and scores is always a good idea. Should inaccurate information be found – in the case, for instance, of fraud or identity theft – actions can be taken in a timely manner to limit exposure.
  2. Prioritizing debt: According to US News, this starts with “taking advantage of the CARES Act and the temporary credit score protection offered to those who are unable to make their minimum monthly payments.” If their accounts are currently in good standing, your customers can ask their lenders for payment accommodations. Then, if they can pay some of their bills but not all of them, they should prioritize based on the two different types: secured and unsecured. Paying secured debts first, i.e. mortgage and auto, ensures that they do not lose their home or vehicle.
  3. Making every effort to make payments on time: While it may get difficult, it’s best to make at least a minimum debt payment by its due date every month. Credit scores are greatly impacted by late or missed payments. If your customers hope to emerge on the other end of this crisis with a credit score that will serve them well, they should make every attempt to maintain on-time repayment even if they’re only paying the minimum amount. 

Conclusion

When it comes to important matters that can have a long-lasting impact on such things as credit, financial institutions have not just an opportunity, but a responsibility to keep their customers informed. Take this opportunity to be the trusted advisor that your customers need.

For more information on how BankMarketingCenter.com can help you with communicating vital information to your customers – for example, with our ads focused on credit score management during Covid-19 – visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

 

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Banker Action Figures? You Never Know…

With more than 80,000 people dead and nearly 35 million out of a job, America is desperate for some good news. 

According to an April 17 McKinsey & Company article, “A leader’s guide: Communicating with teams, stakeholders, and communities during COVID-19,” crises can produce great leaders and communicators, those whose words and actions comfort in the present, restore faith in the long term, and are remembered long after the crisis has been quelled.”  The same, of course, can be said not just of leaders and communicators, but companies and brands.

What’s a great example of a brand “that will be remembered long after the crisis”? Mattel, for its Play It Forward program.

Mattel is “playing it forward” with a new set of “Thank You Heroes” that celebrate the selfless courage of essential workers and first responders. According to the company’s website: “We're talking about those brave souls who carry on doing their jobs despite the risks in order to keep the rest of us safe, secure and healthy. We salute these heroes, and we think they're pretty amazing role models for kids. Let's play their heroism forward by lending a helping hand and sharing a little gratitude.” With each online action figure of the #ThankYouHeroes Collection sold, $15 is donated to FirstRespondersFirst, a fund dedicated to providing essential supplies, equipment and resources for frontline healthcare workers and their families. In another recent promotion, Mattel donated one Barbie Career Collection doll for every doll sold to the First Responder’s Children Foundation, which to date has:

  • Funded more than 11,000 hotel room nights for first responders who couldn’t go home
  • Awarded more than $1 million in immediate grants to hundreds of first responders with financial hardship due to COVID-19.
  • Distributed more than 100,000 FDA certified, surgical grade masks to first responders
  • Paid for funerals of first responders who have died from COVID-19, and
  • Continues a 19-year mission funding college scholarships that benefit children of first responder parents killed or injured in the line of duty.

But Mattel’s roster of superheroes may not be complete.  And here are just a couple of examples.

Like all community banks, Jill Castillas Citizens Bank of Edmond is doing its best to ensure the safety of customers, while taking some innovative steps to maintain the level of service that customers need and deserve. In order to encourage drive-thru use and make it work, the team at Citizens Bank of Edmond “came together and adopted a Chick-fil-A mentality,” Castilla says, “where we use walkie-talkies and tool belts and try to assist customers with our drive through.” With the bank’s new curbside service, customers can actually go on the bank’s website and make an appointment for a particular service, which they can then transact in the bank’s parking lot. “You can not only select the service you need with the day and time, but can also request a particular employee with whom you’d like to meet.”  The bank is also offering limited lobby service by adopting the “restaurant-style” use of buzzers that alert customers to when they can enter the lobby.  One of the beauties of the buzzer system is that, according to Castilla, “the buzzers travel far enough that a customer can visit a downtown shop or restaurant while waiting!” 

And then there’s Zach Turner, who manages the Regions Bank in Ooltewah, Tennessee where as recounted in American Banker’s “Coronavirus through the eyes of front-line bankers,” his bank was faced not just with a pandemic and an economic crisis, but a natural disaster, as well. “As if a global pandemic wasn’t enough of a challenge, seven tornadoes hit the Tennessee Valley in mid-April. Bankers and customers alike faced ruined infrastructure and internet and power outages. Once Turner’s branch got back up and running, his team pivoted to helping customers handle large insurance payments related to the natural disaster.”

As Dave Martin pointed out in his American Banker article, “many banks are deferring payments, lowering rates and often providing additional financing (at extremely low rates) for customers to be able pay the money owed to their own suppliers, for example. These efforts were not brought on by a government edict. In a time in which days matter — and government agencies take weeks to respond — the nations’ banks are standing among the economy’s first responders.”

Do you think Mattel might add a community banker to their action figure collection?  We think they should.  What do you think?

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How the Paycheck Protection Program showed the True Worth of Community Banks.

It took a vicious virus and the Paycheck Protection Program (PPP) to show the American people the true worth of Community Banks. Yes, the Bank of Americas of the world do have more technology, more branches, more marketing muscle, more ATMs, and more employees. But, the Community Banks seemed to have a passion for taking care of their customers and their local community that, frankly, seemed a bit lacking on the big bank front.

I know many, if not most, of these community bankers worked all during Easter weekend to help their local businesses apply for what turned out to be, of course, extremely limited (and competitively-sought-after) PPP funding. They worked from home, many hours day and night, to protect their customers and their community. Their efforts paid off. Rob Nichols, CEO of the American Bankers Association, reported a couple of weeks ago that 60 percent of the PPP loans made to date have been made by community banks throughout the country.

I know someone who has been a customer of Bank of American for 35 years. They were not so fortunate.

On April 3rd, at 8:00 am, on the opening day for PPP applications, they called and emailed their “BOA, Small Business Banker” asking about how they should apply for the PPP.  A couple of hours later they received an email saying “Please go to www.bankofamerica.com/sbresources to apply, the site is live.”

When they went to the site, it said they had to have a “pre-existing business lending and business deposit relationship with BOA”.

Fortunately, or in this case unfortunately, they have no debt. And by this time, their BOA Small Business Banker’s voice mail was full and she wasn’t returning emails. 

On Monday, April 6th, after a national outcry from angry customers, Bank of America had reversed its ridiculous decision and would allow businesses to apply if they had a “Small Business checking account opened no later than February 15, 2020, and do not have a business credit or borrowing relationship with another bank.” Within minutes they applied and received an email stating “Your application has been submitted”. 

On Thursday, April 8th, they received a phone call from an individual stating that they were with Bank of America and wanted to confirm that they had uploaded their documents for the PPP.  The BOA representative wasn’t even able to access the files and had no idea what had been uploaded.

A week later, on April 15th, they received an email from BOA stating, “We need additional information to process your Paycheck Protection Program Application. After logging in you'll be prompted to update your business information.”

Guess what? There was no prompt and no help button. And obviously no one to speak with. In multiple places on their emails and website they state: “Any communication about the process and your loan will occur through your IntraLinks workspace OR via a call from our underwriting centers. Bank representatives are unable to discuss eligibility with Applicants or assist Applicants in competing the application materials.”

After hearing about how many community bankers worked over Easter weekend and how many PPP loans the community banks were making, they contacted a local community bank, Signature Bank in Sandy Springs, GA. They spoke with a real person and were told exactly what they needed to do.  In less than 24 hours they received an email from Signature Bank that their PPP loan request had been approved!

They have yet to hear from Bank of America and don’t even expect to.

I don’t think BOA ever intended to make PPP loans to customers that didn’t have loans with them. They just changed their website to make it look that way. It became obvious that BOA was not in business to help the local small businesses. And that’s not just my opinion. It’s also the opinion expressed by the Wall Street Journal in their April 6 article, “Big Banks Favor Certain Customers in $350 Billion Small-Business Loan Program”.  According to The Journal, many applications were denied because the applicant “hadn’t borrowed from BOA in the past.”

To be fair to BOA, they were not the only big bank that found themselves tripping over their own feet over the last couple of months. In an Alignable article by Eric Groves entitled, “JP Morgan Chase turns it’s back on Small Business Clients,” Groves points out that “Chase decided to serve the needs of larger clients while ignoring small business owners when they needed this financial powerhouse the most. Clients were told they should not open up applications with other financial institutions if they were going to submit with Chase. The bank then processed only 27,307 loan applications to reach a whopping total of $14 billion in CARES Act Relief. Their average loan size was over $500,0000, generating over $200,000,000 in processing fees for themselves.”

Our company, BankMarketingCenter.com, works with over 250 community banks and I am so proud of all of them. They have shown their true worth during this economic crisis. Cheers! The secret now is for these community banks is to make sure they supply these small businesses with all the products and services offered by the larger banks, including remote deposit capture, mobile banking, and payroll services. They also need to continue to do a good job of messaging; letting their customers know that they appreciate them, and that they are there for them with the assistance they need right now, from loans to investment products.

As the saying goes, sometimes you have to get sick in order to feel better. What this crisis has shown, through a sickness in both health and wealth, is that community banks, and community bankers, really care.  Congratulations on a job well done!

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66% of You will Fail this Test.

It’s a financial literacy test, and a full 66% of Americans cannot answer more than 3 out of 5 questions correctly.

April is Financial Literacy Month, a time when we recognize the importance of financial literacy and how we are doing at this as Americans. If you recall, we discussed this just about a year ago in our blog “Financial Literacy becomes Required Subject.”

So, what has changed since then?  On March 11, 2020, according to the World Health Organization, the Coronavirus Disease 2019 (COVID-19) officially reached pandemic status. Families across the globe are now faced with a crisis unlike any in their lifetimes. A crisis not only of health, but also of financial wellbeing. As you can imagine, there is no better time than the coming months to talk about financial literacy and the importance of sound financial management.

This is a tremendous opportunity for financial institutions. In order to properly prepare our children for the huge leap into adulthood it is imperative they are equipped with tools to properly manage their money, obtain and maintain credit, plan for their future savings, budget their expenses, and much more. Who are the parents of those children so in need of an education in how to manage money?  Your customers.

According to the Council for Economic Education, fewer than a third of the high schools in the U.S. require high school students to take a personal finance class in order to graduate. And one in five 15-year-olds in the U.S. lacks basic financial literacy, according to the Program for International Student Assessment, as outlined in a US News and World Report article, 8 Scary Financial Statistics and How to Avoid Becoming One. Concepts such as student loans, interest rates, qualifying for a mortgage, credit, and balancing a checkbook are proving to be foreign concepts to many Americans. Recent studies show that “Americans demonstrate relatively low levels of financial literacy and have difficulty applying financial decision-making skills to real life situations. Study participants were asked five questions covering aspects of economics and finance encountered in everyday life. In the U.S., 66% are unable to answer more than three of the five questions correctly” – a worrisome figure!

What happens when young people do not achieve a good foundational understanding of money management?  They become the elderly Americans who are not prepared for retirement, of which there is an absolutely staggering number. According to a pre-Covid 19 survey done by the Federal Reserve Board, around 40% of U.S. adults do not have enough money in their savings account to cover a $400 emergency or household expense.  That financial situation has, unfortunately, worsened for many Americans.

Given the uncertain economic times we now face, and we could face tough times for quite some time, it’s critical that young people know how to earn, save, invest, and spend their money.  And as a financial institution, the lessons you help their parents teach will benefit them (your customers), their children (your future customers) and, therefore, your bottom line. By providing your customers with just a few of the basic tools and guidelines they need to educate their children in financial literacy, you can enhance your brand image while helping your future customers better understand, and value, the products and services you offer.

For more information on how BankMarketingCenter.com can help your bank with messaging that stresses the importance of financial literacy in a Covid-19 world, contact Neal Reynolds at 678-528-6688 or nreynolds@bankmarketingcenter.com

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Get Your Message Out.

Financial institutions have a tremendous responsibility, now and in the coming months. Because right now, your customers are engaged in the financial struggle of their lives.  According to the 2019 U.S. Financial Health Pulse report, less than 30% of Americans are considered financially healthy enough to get through a single month on their savings.  When asked about their financial status, 54% reported “struggling” and nearly 20% described themselves as “vulnerable.” And, sadly, that survey was conducted even before Covid-19 swept the nation.

Your customers need your assistance. They need your assurance.  As their financial institution, what is your message going to be? Here is some of the messaging we’ve created for our banks, which they in turn have put to good use reaching out to their customers.

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CARES Act Loans now available

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn.  But with 35 million small businesses in the US, these loan dollars will be distributed quickly. Make sure that your small business owner customers know about this opportunity!

Client Spotlight: Equitable Bank

Alison Larson, Vice President, Marketing Director at Equitable Bank, needed new creative that she could use to let her customers know about SBA Loans that could be available to small businesses. She was able to customize our “Coronavirus SBA Loan - Shot In The Arm” layout to perfectly match her bank's brand and get the message out to her customers via social media.

"That particular one I added to LinkedIn with some links to content I thought our small businesses might be interested in. I may add it to Facebook, too."       - Alison Larson

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They’re Safe. And So Is Their Money.

Customers are still very concerned about their safety… and the safety of their accounts and investments. Provide them with the peace of mind they need with messaging that assures them that you’re taking the necessary steps to ensure both their personal health… and wealth.

Client Spotlight: Lifestore Bank

April Hartzog, Marketing and Process Coordinator at Lifestore Bank, wanted to guide her customers in alternative ways that they could still access her bank's services. She was able to easily customize our “Coronavirus - You Don’t Have to Walk In” layout to focus on online and mobile banking, and even included steps to make it easier for her customers to get started.

"I really appreciate the groundwork being done already by Bank Marketing Center. As the only person creating marketing and communication pieces for our bank and updating the website with current information, I just did not have time to create anything from scratch. It was fast and easy to find a layout that worked and to edit it.”           - April Hartzog

 Client Spotlight: American Nation Bank

Kevin Butler, Executive Vice President at American Nation Bank, decided to go in a different direction giving his customers peace of mind during unpredictable times. He needed to create content that reflected what his community needs right now. He was able to customize our "Coronavirus - Economic Stimulus” layout to focus on his bank’s payment deferment options so that customers seeking financial relief knew what actions they could take immediately. 

"We are in a constantly changing environment. New government programs along with waiting for guidance from the government as to how to implement them are a struggle. Yet we need to be united in our message as to the overall strength and stability of our banking system. We need to encourage calmness in a time of stress."  - Kevin Butler

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Signs of the Times… Unfortunately.

Closing branch offices? Let customers know with closure signs that are quick and easy to customize and print in whatever quantity you need.

Client Spotlight: United Republic Bank

Amy Keltner, Executive Assistant & Marketing at United Republic Bank, needed to quickly inform her customers of a temporary Saturday closure of the bank's lobby without spending too much time developing content. She was able to customize our “Coronavirus Closing - Temporary Closure” layout to inform her customers about alternative ways they could still access their accounts and bank services.

"During this ever busy and mind-boggling time in keeping things going, it is great to have these various templates and not having to create the wheel but just make it your own.”         - Amy Keltner

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For more information on how BankMarketingCenter.com can help your bank with the critical messaging needed during this Covid-19 crisis, contact Neal Reynolds at 678-528-6688 or nreynolds@bankmarketingcenter.com

 

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Leading your Institution in a Time of Crisis

On March 11, 2020, according to the World Health Organization, the Coronavirus Disease 2019 (COVID-19) officially reached pandemic status. Corporations, and their leadership, are now faced with a crisis unlike any in our lifetimes. Even the challenges presented by the 9/11 attacks, as devastating as they were, do not equal those faced by America’s business leaders today.

What are the most important characteristics of good leadership in a crisis? Credibility, transparency, and visibility. These may not be all of what’s needed, but they’re certainly in the top ten.

What the leaders of financial institutions must do right now is respond in the way Mayor Giuliani did in the wake of the 9/11 attacks. In Paul Argenti’s Harvard Business Review article Crisis Communications: Lessons from 9/11, he describes Giuliani’s response, now legendary. “New York City Mayor Rudolph Giuliani arrived at the World Trade Center within minutes of the first attack to take charge of the rescue operation. In the days and weeks that followed, he would conduct several press conferences in the vicinity of the destroyed towers, attend many funerals and memorial services, and maintain what seemed like a ubiquitous presence in the city. His visibility, combined with his decisiveness, candor, and compassion, lifted the spirits of all New Yorkers—indeed, of all Americans.” 

The challenge you face now is different and, in many ways, tougher. 9/11 did not create the isolation that we’re experiencing with Covid-19. Predictions have the unemployment rate at 20%, and businesses are closing, complete industries are shutting down. Groceries and medications are in short supply. Schools and daycare centers are closed, leaving many parents to not only try to maintain a household in a tough economy, but care for their children, as well.

If ever there were a time when you should be making use of every social messaging tool you have, this is it.  Keep your members and customers abreast of the important developments that are occurring every day, as well as the products and services that you can offer to help. And use every available tactic to do so:  social posting, advertising, newsletters, email and direct mail. Some institutions are even holding live stream town hall meetings for those who bank with them, giving leaders an opportunity to literally converse with stakeholders.

Financial institutions have a responsibility to keep their customers and members, as well as their families, informed… and more. You also have the opportunity to instill the confidence, optimism, and a sense of shared goals that people desperately need at this moment.

For more information on how BankMarketingCenter.com can help your institution with communicating vital information to both your customers and your associates regarding the Covid-19 crisis, visit www.bankmarketingcenter.com, or contact Neal Reynolds by phone at 678-528-6688 or by email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

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Elder Financial Exploitation. Are We Doing Enough?

 

In a June 2018 white paper, “Elder Financial Exploitation. Why it is a concern, what regulators are doing about it, and looking ahead,” issued by the US Securities and Exchange Commission, author Stephen Deane called elder financial exploitation “a public health crisis, a virtual epidemic.” 

Why are our elderly more vulnerable to financial exploitation? And why is the problem likely to get worse?

America is aging at a rapid rate

The number of adults 65 or older is expected to reach 90 million by 2050.  According to the United States Census Bureau, “in less than two decades, the graying of America will be inescapable: Older adults are projected to outnumber kids for the first time in U.S. history.” Already, the middle-aged outnumber children, but the country will reach a new milestone in 2034, says the U.S. Census Bureau, when older adults will edge out children in population size: People age 65 and over are expected to number 77.0 million, while children under age 18 will number 76.5 million. It goes without saying that this aging trend lends a special urgency to the problems of elder financial exploitation.

Substantial financial resources

The second set of factors are related to financial and retirement trends. The assets that the elderly have accumulated through life make them a target of financial exploitation; according to the U.S. Census Bureau, the median net worth for homeowners age 65 and older is $201,500.  Moreover, pension trends increasingly have shifted responsibility to the elderly themselves to manage their retirement savings and investments. 

Cognitive decline

“Cognitive decline” is a condition in which decision-making becomes more and more difficult among the elderly. Losing our ability to make clear-headed decisions as we age, especially on matters of such importance as investing, can be even more debilitating than physical decline. Why? The impact of a decision that leads to elder financial exploitation does more than completely devastate an individual; it can be devastating for their loved ones, as well.  An elderly parent who is suddenly faced with financial ruin can put a tremendous strain on family members, who are then faced with taking on that responsibility.

How big a problem is it?

A  study of elder financial abuse conducted by MetLife estimated the cost of financial abuse of the elderly in the U.S. at $2.9 billion.  The study goes on to say that “it has been widely noted that this number probably underestimates the losses, because it relies solely on amounts reported in newsfeed articles. As a result, the annualized estimate could significantly underestimate the true extent of victim losses.”  The National Council on the Aging has this to say on the subject: “While likely under-reported, estimates of elder financial abuse and fraud costs to older Americans range from $2.9 billion to $36.5 billion annually, as the overwhelming majority of incidents of elder financial exploitation go unreported to authorities.”

Another problem with estimating the damage is that victims are encouraged and sometimes even paid to not report an incident of abuse, and a January 31, 2020 article in the Wall Street Journal cites such an incident.  According to reporting, Bank of America Corp. told a 92-year-old customer that the bank would attempt to recover the nearly $40,000 he lost to a phone scam, but only after promising, by signing legal documents, that he would not discuss the fraud or sue the bank. “Such agreements,” says the article, “help conceal losses to scammers, consumer advocates say, limiting awareness of increasingly sophisticated forms of fraud that many victims already find embarrassing.” 

What’s being done and is it enough?

Fortunately, financial institutions, as well as regulatory agencies, are beginning to take the issue more seriously. FINRA (Financial Industry Regulatory Agency) has already taken steps to curb potential fraud in brokerage transactions; FINRA’s recent rule changes allow certain financial firms to place a temporary hold on disbursements from the accounts of customers when financial exploitation is reasonably suspected.

Banks and credit unions are following suit, but taking steps cautiously due to legalities and privacy concerns.  Privacy laws, for example, which vary from state to state, can prevent financial institutions from aiding scam victims.

In the meantime, financial institutions can and should consider operational and compliance measures that can stem the tide of exploitation. According to a February 2018 article on BankDirector.com, “while bank and credit union staff are on the front lines in protecting elderly customers, bank directors play a pivotal, top-down role in emphasizing a culture of vigilance, and in defining policy and strategy to combat elder financial fraud.”  What can they do?

Policies, Procedures, and Training

Directors need to create policies and procedures that will address elder exploitation at their branches, where most elderly customers and members make their transactions. This can start with clearly articulating to staff your organization’s views, guidelines and stated mission with regard to elder financial fraud. Guidelines should then be put in place. According to b, “these may include pre-set withdrawal limits (either daily or monthly), disbursement waiting periods or communications with external sources, such as a trusted contact person for the client, local adult protective services (APS) or law enforcement.”

Lastly, in order to be effective in putting these guidelines into practice, it’s important that staff members receive the training they need to help them identify, address, and report potential incidents of fraud. Front line employees should understand it is critical that even suspected exploitative activity must be escalated through proper channels at their institution.  More importantly, they must know that they have the full support of management throughout the process.

Educate your Members and Customers

Your senior customers and members are not the only ones who need to be able to recognize potential fraud.  Family members, too, should understand what fraud looks and sounds like, and know how to respond.  In-branch messaging, along with “Lunch and Learn” meetings, can go a long way in educating those who could be affected.  Taking the message beyond the branch and into the community can be effective, as well, with presentations made to local assisted living and retirement communities, as well as professional organizations such as Rotary Club.

In addition to education, there’s also the promise of new technology. According to the 2018 SEC report, IT advancements present the most viable solution, “with technologies that will detect, prevent, and perhaps even predict the risk of elder financial abuse. Two-method verifications, voice recognition, and facial recognition are just a few of the emerging tools that could be used to foil attempts by imposters to steal money from the account of victims.”

Conclusion

To recap, elder financial exploitation is already considered a public health crisis and is expected to grow dramatically along with the aging of America, and the trends we’ve talked about here will only exacerbate the problem. 

Financial institutions have a responsibility to keep their customers and members, as well as their family members, informed. While regulatory agencies work toward solutions, banks and credit unions would do well to make certain that those who bank with them are protected. 

For more information on how BankMarketingCenter.com can help your bank with communicating vital information to both your customers and your associates regarding elder financial exploitation, visit bankmarketingcenter.com, or contact Neal Reynolds by phone at 678-528-6688 or by email at nreynolds@bankmarketingcenter.com .  As always, I would love to hear your thoughts on this subject.

 
 

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The Negative Review... Is there Such a Thing?

 

In one of our more recent blogs, we talked a bit about the benefits of social media. Since then, we’ve been hearing from some financial institutions that, well, weren’t convinced that a social media marketing program was right for them.

Their reasoning?  Negative comments.

Is that a legitimate concern? Well, the honest answer is yes… and no.

The reasons behind the “yes” answer?  Negative comments and review about your business on social media can be costly. Research has shown that a negative comment can cost your institution approximately 30 potential customers.  That is, however, if that comment or review is not responded to in the appropriate way.  Which brings us to the “no” part of our answer.

Let’s face it.  There’s a lot of truth to the old adage that you can’t make everyone happy, no matter what you do or how you do it. Taking this to heart, you can begin to understand that perhaps negative comments and reviews are not the worst thing in the world.  Why is that?

Be Proactive

We need to start with being proactive with our social media management.  That means staying ahead of potentially negative comments by “diffusing” them before they even appear.  This is accomplished through positive comments.  Integral to your social messaging is the message that you welcome comments.  Invitations such as “tell us about your experience,” and “don’t forget to mention your great experience on our social media,” will ideally keep the positive messages flowing on your social platforms.  When someone sees one negative review surrounded by 7-10 positive ones, the negative effect of that one comment is greatly diminished.  It provides an additional, positive perspective and that’s critical to your social marketing success.  And, believe it not, a negative comment can even “add legitimacy” to your social messaging.  Sad to say, people tend to question the legitimacy of platforms such as Yelp and Facebook when they show only positive reviews and no negative ones.

Take the high road and take it quickly.

Another step to take in keeping your platforms working for you in the event of a negative comment is this: Act quickly.  Individuals watching your social media are just as interested, if not more so, in how you respond to a negative comment than the comment itself. 

A great example of this:  Capital One’s response to one hundred million Americans having their personal information, transaction data, credit card numbers, and social security numbers stolen by hackers.  When they announced that "no bank account numbers or Social Security numbers were compromised," but then listed tens of thousands of bank account numbers and social security numbers that were compromised, they caused a “Twitter storm” that took months to subside.

Here’s something you must consider that other businesses needn’t. As a financial institution, there are always security threats when any account holder info is made public, even just a name.  Customers who post to your sites may not be thinking about the fact that others are watching. If for example, a customer has a concern about a particular service you offer, one that they’re taking advantage of, it’s best to take that conversation out of the public view.  Let the individual commenting know that you’re sorry that they feel the way that they do, that you understand, and that you’d like to speak with them further, but privately.  The last thing you both need is a hacker getting into the conversation.

Monitor your Platforms Regularly

By keeping close tabs on the dialogue you’re having with your customers – and responding promptly and in a productive way – you’re creating personal relationships that can then become mutually-beneficial business relationships.  You can also learn from your social interactions. Perhaps many people are complaining about/commenting on a similar topic, service, or member of your team. Perhaps those complaints are legitimate. Social media comments can help you gain insights into how customers, and potential customers, see your business; very useful information when you want them to do business with you! So, don’t let the potential for a few negative reviews or comments deter you from social media marketing.  See these comments, instead of negative, as opportunities to build relationships and with those relationships, your business.

For more information on how BankMarketingCenter.com can help your bank with Social Media, here’s an article on social media marketing that we feel is worth reading.  You should also feel free to contact Neal Reynolds @ 678-528-6688 or nreynolds@bankmarketingcenter.com

 

 
 
 
 
 
 
 
 
 

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Time to Get in the Social Marketing Game.

 

The name of the game, when you’re a financial institution looking to grow deposits, customers, and revenue, is to build relationships. This can be challenging, however, in the digital age.  While you still have customers who bank in more traditional ways, there’s a new breed of customer out there. And building a relationship with this customer is not easy… but it’s also critical. These are digitally-savvy individuals with high expectations and low attention spans, individuals who are much more apt to open an app than a magazine.  The way to reach these future customers, who you really need now not tomorrow, is through the media with which they’re most comfortable. Social.

Is social a big deal?  You can bet your bottom dollar it is.

According to the latest Global Digital suite of reports from Hootsuite, the number of people around the world who are active social media users reached 4 billion in 2018.  Today, well over half of the world’s population is online. Needless to say, social is here to stay. 

How are financial institutions responding? According to a recent study by the ABA, nine out of ten banks surveyed are either “somewhat active” or “very active” on social media. It’s no surprise that FIs are working hard to build strategies that can make social media marketing an integral part of their overall marketing.  After all, social platforms can help you connect with your customers, build relationships, increase brand awareness about your brand, and generate sales leads. All good things, right?  If you’re not convinced, consider the following.

Why Social?

The quick answer? It’s both efficient and effective. Social media marketing can be implemented for a fraction of what more traditional media such as television, and outdoor boards can cost.  Second, social media marketing is measurable, which means you can refine and re-align your messaging as you go.  A benefit that traditional marketing tactics such as print and direct mail, simply can’t offer. Third, this type of marketing facilitates interaction that others don’t; interaction equals engagement, engagement equals relationship which eventually – hopefully – leads to loyalty and increased revenue.

So, what’s next?

Right now you’re probably experiencing that “pre-social media euphoria,” a feeling that social media marketing is quick, cheap, and easy.  Unfortunately, making the most of social platforms isn’t quite that simple. A successful social media marketing campaign, like any successful endeavor, must start with a plan… a SMART approach.

Social media marketing. It starts with a SMART plan 

The secret to successful marketing is, of course, planning.  Before you spend a dollar, you want to have a comprehensive picture of your market. Who are your potential customers? Where will you find them?  What should you say to them? What are your competitors saying? When is the best time to reach them?  And, how can you get your message to them in the most cost-effective manner?

As a critical component of your overall marketing plan, social messaging deserves the same consideration as any marketing initiative. So, before you even consider posting to Instagram or opening a Facebook account, here is what you need to do first:

Set SMART goals

Step one of any planning process is always goal setting.  What are you looking to accomplish?  Perhaps your goal is to build brand awareness.  To generate qualified leads and drive sales.  To cross sell new products or services to existing customers. Or, to improve customer retention. This is where a SMART goal-setting framework can be of tremendous help. Establishing such a framework will help you create meaningful, measurable, and achievable social media goals that will support your business in the long run.   What does SMART mean? 

  • Specific: Specific goals are more readily measured, making it easier for you to track your success.
  • Measurable: Make it measurable. “Reducing costs” is a worthwhile goal, but it’s vague.  “Reduce payment and deposit processing costs by 20%” is a goal that, by contrast, is not.
  • Attainable: Sometimes, you won’t be able to really determine the achievability of your goal until you’ve begun your efforts to accomplish it. If you set a goal to reduce your processing costs by 20% and reduce them by 10% in the first month, you need to re-think that goal!
  • Realistic: Is your goal a realistic one?  A 20% reduction in cost seemed, initially, like a realistic, attainable goal. Adjust as needed. Keep your goals attainable, but give yourself something to aim for.
  • Time bound: Every goal needs a start and a finish. Without a completion date, you can’t measure success.

Now that you have an idea of how to set goals, next we’re going to talk about social media channels and what they have to offer in terms of helping you grow your business.

On your mark, get set, get social!

You know that you need a social media marketing plan; you just don’t know where to begin, right? Which platforms make the most sense?  Well, here are the ones that should be at the top of your list! As you’ll see, each one is unique, offering its own unique opportunities:

Facebook

The oldest and by far the most far-reaching of all social channels, Facebook boasts over 2 billion users around the world. This platform has gained popularity among businesses not just for its affluent user base, but also for the variety of options it offers, including professional pages, paid post promotion, and native advertising.  For financial institutions, Facebook is an ideal channel for reaching an older (55+), affluent market with products such as second home mortgages and retirement vehicles. To learn more, visit https://www.facebook.com/business

Twitter

For a long time, Twitter was known as the platform for Millennials. All that has changed. For businesses, including banks like yours, Twitter is 1) a way for customers to share compliments and complaints (yes, unfortunately!) and 2) an opportunity for you to learn more about your customers and to quickly address their needs in terms of products, services, and social responsibility, for example. Twitter now offers a series of features geared toward customer service and support, which will “enable businesses to focus on personalized, customer-focused responses in order to provide winning social customer service.”  To learn more, visit Twitter Business .

Instagram

Instagram has a following of approximately one billion users. As of August 2019, 36% percent of users were between 25 and 34 years old while 23% of users were between 18 and 24. Instagram  users, then, are largely Millennials, a desirable market for financial institutions, particularly as they move to a digital banking experience that is “in hand” versus “in branch”. In addition to building social relationships, Instagram also offers paid advertising options.  To get started,  visit Business.Instagram.

YouTube

YouTube is the second largest social network and second largest search engine in the world. Almost 5 billion videos are watched on YouTube every day. YouTube is an ideal platform for complex products or services – for financial institution, services such as home mortgages, for instance – one, if you’re looking to reach a relatively young audience (perhaps first-time home buyers) and two, where long-format informational videos can go in-depth on the benefits your products/services offer.  YouTube also reaches individuals age 45-64, making it a good vehicle for retirement products.  To learn more, visit youtube.com.

All in all, social media channels can be truly effective in helping you introduce new products, cross sell, gain valuable insights into customer preferences, improve customer service, and more.  Ready to get started?  Get out there, then, and get social! 

For more information on how BankMarketingCenter.com can help your bank with Social Media, contact Neal Reynolds @ 678-528-6688 or nreynolds@bankmarketingcenter.com