Category Archives: Banking

Financial Services Marketing Symposium 2011: Marketing Critical to Driving Adoption of Mobile Technology

Mobile banking was a hot topic at last month’s Financial Services Marketing Symposium. Apps and mobile-friendly online banking sites are proliferating at a rapid rate, and Frank Aloi of ath Power Consulting revealed some research that shows why: mobile banking users are very active, and with the low cost of mobile banking transactions, they are also more profitable than other customers.

What’s more, John Auger of Citizens Financial Group showed that for his organization, the average mobile customer is not only more active in mobile banking, but in all channels:

To capture the opportunity in the mobile space, banks can’t rely on product development alone – a robust communications strategy is a must for successful adoption.  Although the benefits of new technology may seem obvious to those who develop the innovations, consumers need to be shown exactly why new technology is significantly better than the banking and payments solutions they already have, according to conference speakers from Citibank and RBS Citizens.

Trends in U.S. Bank 3Q11 Marketing Spend

A scan of U.S. banks’ financial reports for 3Q11 shows that many of the leading banks reported strong year-on-year increases in their marketing spend. Banks reporting double-digit growth rates include:

  • Chase: increase of 42%, to $926 million
  • Citi: up 39%, to $635 million, driven by new consumer marketing campaigns, and sponsorships
  • Capital One: rise of 25% to $312 million
  • Bank of America: growth of 12% to $556 million

However, the rise in marketing spending is not universal, and a number of other leading financial institutions have cut expenditure levels year-over-year. Most notable is American Express, whose marketing and promotion spending fell 14% y/y to $757 million (of course, this follows a significant ramp-up in marketing spending throughout 2010).

In general, banks must balance external and internal forces to determine the appropriate levels of marketing investment:

  • External: banks are looking at capture their share of business in certain segments (e.g., affluents) and/or product categories (e.g., auto lending, credit card, commercial loans).  And this need to invest in growth areas is particular strong at present, given banks’ struggle to generate meaningful revenue growth.  However, if there are strong indicators of deteriorating economic conditions, banks may want to scale back on their marketing spend.
  • Internal: banks must also recognize their own circumstances and challenges and how this impacts on marketing spend.  For example, many banks now have programs in place to reduce expenses (see our recent blog on brand cost containment programs). And marketing is frequently one of the first casualties of a bank-wide crackdown on costs. However, there are also internal forces that may lead to significant increases in marketing spend; for example, a bank may have just completed a significant merger, and will need to invest in marketing to support the overall integration effort.

Spate of small business lending commitments by banks

A meeting yesterday between Vice President Biden and 13 U.S. banks has resulted in a number of these banks announcing or reiterating small business loan commitments.  The banks include:

  • Chase: announced that it was on track to increase small business lending this year by 20% over 2010 levels, to $12 billion
  • Citi: committed to lend $24 billion to small business over the next three years ($7 billion in 2011, rising to $9 billion in 2013)
  • KeyBank: committed to lend $5 billion to small businesses over the next three years
  • M&T Bank: pledged to increase small business lending by $50 million over 2010 levels for each of the next three years

For banks, making such a commitment is important, as it acts as a rallying point around which resources can be concentrated.  Having a specific commitment also implies that the bank’s senior management has approved the objective, another key criterion for success.

However, announcing a specific lending commitment is only a first step.  For banks to achieve a small business lending objective, they need to design and implement an integrated plan that encompasses a wide range of activities, including:

  • Customer and competitive intelligence
  • Segmentation and targeting
  • Data mining
  • Product, service and offer development
  • Marketing communications
  • Merchandising
  • Sales channel optimitization (including structuring, incentives, training, and ongoing sales support)

In addition, these activities needs to be organized around customer needs and bank opportunities at various stages of the customer lifecycle:

  • Acquisition
  • Oonboarding
  • Cross-sell
  • Retention
  • Ongoing relationship development

For more insights in developing effective small business banking operations, see our white paper on The Transformation of Small Business Banking in the Thought Leadership section of the EMI Strategic marketing website.