Category Archives: Banking

Marketing’s Finally Taking Commercial Banking Seriously…and Vice Versa

For decades, bank marketers have all but ignored their commercial banking segment.  A few print ads, the occasional golf sponsorship and one or more expensive brochures were the familiar marketing program.  But as commercial banking has taken on a lead role in delivering profitable growth in the new normal post-recession, marketers are recognizing the importance—and the complexity—of supporting commercial sales acceleration.

EMI has identified best practices from 5 banks in the vanguard with Commercial Marketing:

  1. Content Marketing that matters:  PNC
    A rich and dynamic content portal featuring a broad and deep array of publications, from Treasury-focused profiles of 32 countries to fast-read, unique perspectives and an active blog….all put PNC at the top of Commercial Bank Marketing.  Love their editorial focus. Topics like “The Evolution of the Strategic Treasurer” and “Fortifying Your Financial Future in Turbulent Times” are compelling, and the content is not hackneyed.  Video reinforces—although the executive “talking heads” get a bit tired.
  2. Video Case Studies you’ll want to watch:  UMB
    “Our customers inspire us” is the hook that draws you into regional player UMB’s non-promotional stories.  These videos take the viewer on walks through real client businesses and clearly demonstrate that UMB knows these clients the way you’d want your banker to know you.
    An entrepreneur who bets everything to make the best craft beer and is now in the top 20 brewers in the nation.  UMB customer since 1991.  A 100-year old flour mill—one of the last independent mills in the US—that’s tripled its capacity and differentiated its brand enough to charge a premium price…with flour.  UMB customer since 1981.  Don’t those stories make you want to look?  UMB Real Customer Stories.
    And take note:  these do not promote bank products.  The bank isn’t even mentioned until the last screen.  It’s enough.  It works.
  3. Printed case studies that tell a story:  BBVA Compass
    Anyone who’s ever tried to create a series of commercial case studies in any industry knows how hard it is.  Find a good story.  Get the relationship owner to let you talk to the client.  Get the client to want to talk to you.  Get the client to agree to tell their story and endorse your bank—even implicitly—in  public.  Then make the story interesting and demonstrate the bank’s role in creating success…while telling the truth.  Then do this 14 times across industries as diverse as recyclable waste management and pulmonary critical care.  BBVA Compass engages you with a Q&A format to tell the story, but makes the bank-specific points it needs to make.  Consistent formats and easy search tools support both push and pull applications.
  4. Making content easy to find, while demonstrating depth:  BMO Harris
    Like other major business banks, BMO Harris has created a Resource Center, the now-familiar nomenclature for the bank’s portal of thought leadership, and new euphemism for “stuff you should be interested in that isn’t directly selling our products but should impress you enough to work with us.”  The customary list of materials—client success stories, webinars, research, white papers, insights—is there, but is easy to search with a well-designed interface that allows an industry, topic or author lens.  The RSS feed option is unusual in banking.  And BMO Harris must pay a pretty penny for the outside content from Forbes and the Wall Street Journal—although these publishers keep it current.
  5. Actually figuring out how to use social in Commercial:  Big & small brands
    Retail banks are starting to establish best practices in social customer service, but marketing ROI has yet to be proven.  And the value of #socialmedia in commercial banking is yet to be explored.  Great thing about social is that size doesn’t forecast success.  Take @AssociatedBiz—at <$25billion in assets based in Green Bay, Wisconsin:  nearly 600 tweets …and already a clear voice, consistent frequency, and relevant content—from managing healthcare costs to security tips—balanced with promotional messaging on vertical specialties and cash management capabilities .  Other end of the spectrum is @jpmorganTS, new to the twittersphere, but already at 1650+ tweets.  Strong content ranges from export financing in Asia to managing regulatory burdens.  Strong integration

Commercial banking deserves great marketing.  Come back for best practices in 1:1 marketing that can drive C&I growth and profits.

Perspectives on Bank Marketing Spending

Directions in bank marketing spend have become more difficult to predict, as banks seek to balance the need to control costs with the desire to capture growth opportunities. Bank marketing spending trends for 2012 show these forces in action. Many large banks now have multi-year expense reduction in programs in place. However, there is growth potential in a number of lending categories (e.g., commercial, mortgage, and auto).

The chart above shows a mixed picture, with double-digit declines in marketing spending for Chase and Bank of America, but double-digit growth by KeyBank , PNC and Discover Financial. So, at first glance, it appears that the largest banks are cutting their marketing budgets, while some regional banks are ramping up their investment.

However, this just provides one year’s worth of data. Taking a longer-term view, the next chart looks at changes in bank marketing spending between 2007 (just prior to the onset of the financial crisis) and 2012.

This gives us a rather different picture, with 7 of 11 banks increasing their marketing spend over the five-year period. And different stories emerge for particular banks as we take the longer-term view.

  • KeyBank’s $68 million in marketing spend is 13% higher than 2011, but 11% lower than the $76 million it spent in 2007.
  • JPMorgan Chase had the largest decline between 2011 and 2012 (-18%), but its $2,577 million spend level in 2012 represented a 24% increase over 2007 levels (and in fact, there were significant shifts in spending during this period, with a 14% fall between 2007 and 2009, followed by a 77% rise between 2009 and 2011).

Even this five-year view does not give us a full picture, as the financial crisis has meant that many banks have changed radically between 2007 and 2012. For example, Wells Fargo and JPMorgan Chase have grown significantly, in large part due to the acquisitions of Wachovia and Wamu, respectively. On the other hand, Citigroup and Bank of America, two of the banks hardest hit by the financial crisis, have embarked on a long-term project to sell off non-core assets.

With this is mind, a more effective way to compare bank marketing spend levels is to look at bank marketing spend intensity (marketing spend as a percentage of revenues).

Taking this viewpoint, we can decipher a number of trends:

  • Banks that lack a retail branch presence (such as American Express and Discover) have the greatest marketing spend intensity. American Express recently reported that, even as it looks to reduce expenses (with plans announced in January 2013 for 5,400 job cuts), it plans to maintain marketing spend at 9% of revenues.
  • Next in bank marketing spend intensity are banks like Capital One and Citigroup, which have national lending franchises but relatively small branch networks. In the case of Capital One, its marketing spend intensity has declined in recent years, from 9.2% in 2007 to 6.4% in 2012. This has coincided with its transition from a monoline credit card provider to a more full-service bank.
  • National banks with extensive branch networks and a full range of services (JPMorgan Chase, Wells Fargo and Bank of America) tend to spend the equivalent of 2-3% of revenues on marketing. There has been some reduction in marketing spend intensity by these banks in recent years, most notably by Bank of America, whose marketing spend as a percent of revenues fell from 3.6% in 2007 to 2.2% in 2012. Wells Fargo stands out from its national bank peers, with marketing spend intensity below 1%.
  • Regional banks’ marketing spend intensity tends to be lower than other bank segments, at 1-2% of revenues.

In summary, bank marketing spend levels are set within ranges that are defined by the bank’s size, structure and product focus. Within these ranges, banks increase or decrease marketing spending from year to year based on both their strategic priorities as well as their assessment of their operating environment.

Bank Results Highlight Branch Network Resiliency

The emergence of online and mobile banking has led to many financial industry commentators to question the sustainability of the branch channel.   Recently-published data from three leading banks (Chase, Bank of America and Wells Fargo) indicates that online banking has achieved critical mass (with huge numbers of users, but low/no growth), while mobile banking is rapidly emerging as a key banking channel.

Does the emergence of online and mobile banking presage the end of branches? EMI’s analysis of the latest data on the top 15 branch networks indicates no significant evidence of banks dramatically scaling back their branch numbers.

  • Of the top 15 branch networks, 7 grew between end-2011 and January 2013, while 8 declined.
  • The largest growth in numbers came from PNC (due to its acquisition of RBC Bank in 2012), Chase and BB&T.
  • The largest declines came from Bank of America, which has signalled its intent to cut its branch network by 10%; and RBS Citizens.

Bank executives reiterated their commitment to the branch channel in reporting their latest quarterly earnings. However, they also highlighted the need for changes to the branch channel in the context of changing customer channel usage and technological advances, as well as the ongoing need to control costs.  Changes will probably involve some reductions in branch numbers, as banks eliminate underperforming individual branches and exit geographic markets where they feel they cannot gain critical mass.  Of course, banks may also seek to grow their branch presence in targeted markets (as Chase is doing in Florida and California).  In addition, bank need to make significant changes to branch design, staffing and operations, a topic that EMI discussed in a recent blog.