Monthly Archives: December 2018

Notes from FinTech Connect 2019: Data Security Has Value, But Isn’t a Value Prop

“Making convenience secure”
“Protect your applications”
“Protect and grow your business confidently”
“Prevents the threat of breaches”

Anyone walking the aisles at the recent FinTech Connect conference in London reading the taglines displayed in the booths would have gotten a clear sense of the overwhelming significance of security in the FinTech space. Not that it should come as a surprise given the constant threat of crippling breaches and compromised data.

What is interesting about the threat and the proclamations of powerful counter-measures is that while the threat hangs like a cloud over the industry, the potency of security efforts effectively require a leap of faith. Just because an application hasn’t been compromised doesn’t mean it can’t be. And when the risk calculation includes the potential damage from a reported breach, even the smallest possibility looms large.

Moreover, the proof of an application’s security lies in the absence of problems. From a marketing perspective, that is a proposition that is very difficult to communicate: part of the customer value you’re delivering is a lack-of-disasters. And a lack-of-disasters is only a differentiating attribute if your competitors have all experienced breaches. In fact, then, data security is table stakes—vital, but not the thing on which you want to hang your positioning hat.

So if data security is important, but is impossible to prove or leverage as a differentiator…

  • Is there still a way to claim some ownership of it as an attribute?
  • Can you create value around an attribute for which nothing happening is a positive outcome?

The answer to both questions is “yes, through content marketing.” Developing and distributing a consistent, relevant, and valuable stream of data security content for prospects and customers is a proven, powerful way to instill confidence and build stickiness. Demonstrating data security expertise through content marketing does infinitely more than a promissory tagline to establish a position of trustability in customers’ minds and reinforce perceived value.

When done well, content marketing can create loyalty even in the face of low switching costs because customers and prospects become hooked on the valuable material delivered and come to recognize you as a knowledgeable and indispensable partner. Moreover, while it’s easy for a competitor to copy tagline promises of data security, it’s much more difficult to duplicate an effective content marketing engine.

 

 

Expanding Beyond Traditional Retail Footprints to Capture Commercial Banking Growth

As banks continue their push for commercial loan growth, they are moving outside of their traditional retail branch footprint. This is driven by a desire to capture opportunities in specialist markets, as well as a realization that bank can establish a strong beachhead in markets even with a light physical presence.

The following table is a summary of commercial banking expansions by leading banks into new geographic markets over the past year:

These new commercial banking locations typically serve as hubs to serve a broad geographic area, and this enables banks to provide quasi-national commercial banking reach.  For example:

  • Santander Bank has opened offices in Dallas, Chicago and Miami in recent months, with each office targeting firms in the surrounding states. For example, the Chicago office aims to serve firms in nine Great Lakes and Midwest states.
  • PNC’s 2018 opening of commercial banking offices in Denver, Houston and Nashville follow on from 2017 expansions into Dallas, Minneapolis and Kansas City.  PNC plans to continue this strategy in 2019 with additional commercial banking offices in Boston and Phoenix.

In addition, some banks are looking to expand an industry specialty nationwide.  Two recent examples of this are BB&T (recreational lending for RV and marine vehicles) and SunTrust (aging services).

In choosing markets in which to expand their commercial banking operations, banks need to consider market factors (e.g., size, growth, industry composition), as well as competitive intensity levels.  Once a bank has committed to entering a new geographic market, it needs to quickly establish a foothold and ongoing presence in that market.  To achieve this, banks should focus on:

  • Staffing. Recruit and deploy commercial banking teams based on their local market knowledge, ability to work in small teams and experience in building a client base in new markets.
  • Prospecting. Develop “ideal” prospect criteria (e.g., revenue size, industry, location), then create a prospect list, profile the top prospects (key decision makers, recent activities, perceived financial challenges), and develop and implement a communications plan.
  • Promotion. Use a range of B2B media to make up for the lack of a dense branch network.  This includes participating in/sponsoring events hosted by local business advocacy groups (such as local chambers of commerce), investing judiciously in local B2B media, and developing a philanthropic presence.
  • Technology. Develop a robust suite of online financial management tools to offset the light physical presence.
  • Service. Seek to develop a reputation for seamless implementation and proactive customer relationship management, which can make up for the lack of a dense branch network, brand equity, and boots on the ground.