Category Archives: Banking

Steady Growth in Marketing Spend and Marketing Ratios for Top U.S. Banks in 2019

EMI’s annual analysis of marketing expenditure for 25 leading U.S. banks reveals that they grew marketing spending by 7% in 2019 to $15.4 billion. This rate was down from the 13% growth between 2017 and 2018.

The banks’ marketing ratio (defined as advertising and marketing spend as a percentage of net revenue) has risen steadily in recent years, growing 18 basis points (bps) to 2.92% in 2018, and by an additional 21 bps to 3.13% in 2019.

The chart below summarizes marketing ratios, marketing budgets and y/y change in marketing spending for these 25 banks.

The following are some additional takeaways from our bank marketing spend analysis:

  • 16 of the 25 banks increased their marketing spending in 2019, with 5 increasing their budgets by more than 10%.
  • 6 banks invested more than $1 billion in advertising and marketing. Wells Fargo joined this group for the first time in 2019, with marketing spending rising by 26%, driven in large part by the launch of the ‘This is Wells Fargo’ integrated marketing campaign in January 2019 . It has invested strongly in advertising in recent years as it seeks to rebuild its reputation following the fallout from fake account and mortgage mishandling scandals.
  • 11 banks increased their marketing ratios in 2019, with 6 of these growing the ratios by more than 10 basis points. The largest rise was reported by Bank of America, whose 15% increase in its marketing spend led to a 38 bps rise in its marketing ratio (to 2.3%).
  • Banks that do not have branch networks and have national credit card franchises (American Express and Discover) had the highest marketing ratios. Capital One’s credit card bank charter – Capital One Bank (USA), National Association – had a marketing ratio of 10.3% in 2019, while its retail banking charter – Capital One, National Association – had a ratio (3.2%) more in line with peer regional banks.

It is almost impossible to project bank marketing spending for 2020, given the impact of the coronavirus pandemic on the U.S. economy in general, and the banking sector in particular. In the short term, marketing budgets will trend downwards as bank revenues are impacted by decreased economic activity. However, unlike the 2018-09 Financial Crisis, the country’s fundamentals were strong heading into this disruption, which increases optimism that the economy can recover quickly once the pandemic abates. This may lead to a robust bank marketing spending in the second half of 2020. What is more clear is banks will continue to shift their marketing budgets from traditional media (e.g., TV and print) to digital and other nontraditional media.

Marketing in the Coronavirus Crisis: Notes from a Discussion at the Boston Meeting of the Gramercy Institute

Just before everything shut down in the face of the pandeminc, a group of financial marketers convened in Boston for a meeting of the Gramercy Institute. The session was billed as focusing on the topic of ”What’s New and What’s Next in Financial Marketing“ and indeed much of the content touched on the future, but, taking a cue from the news at the time, the host initiated a discussion of marketing in a crisis.

Broadly, the conversation fell into two buckets: communication “best practices” and the role of marketing. Two key take-aways:

  • Communication “best practices.” There was agreement that transparency and authenticity were key to building connections with customers, but also that there was no clear playbook for communication frequency and channel. Discussion participants recognized the need to respect the limited time and frayed nerves of customers but also saw potential value in providing clear guidance in an environment filled with uncertainty. Likewise, they recognized the need to find a balance between communication overload – exacerbated by the worldwide turn to digital communications in light of severe restrictions on face-to-face contact – and the value of demonstrating presence and building community when so much of the current crisis feels (and is) isolating. Finally, participants expressed mixed feelings about finding opportunities in the crisis. Many said that this was definitely not the right time to be promoting products. Some made the argument that people are looking for concrete assistance and that there was a place for tasteful promotion of solutions that could meet the needs of customers in the current environment.
  • Role of marketing. As the discussion turned to the role of marketing amidst the crisis, there was widespread consensus that in some ways the environment was one in which marketing could really prove its value in building relationships with customers and prospects and in delivering timely, conscientious, clear communications. Even more, though, there was agreement that marketers at B2B financial services companies should seize on this as a chance to forge a closer partnership with their sales colleagues, who are likely to be struggling to adjust to a world in which face-to-face contact is minimized or even completely foregone. Everyone agreed that if Marketing could find a way to enable sales to leverage digital and voice channels to nurture relationships at a distance and at scale, it would have a significant impact on the ability of the company to navigate these difficult times.

While the event was likely the last in-person meeting for the near future for most in attendance, it was a valuable opportunity to share ideas with colleagues and learn from each other as chaos seemed to be descending. It has given us much to think about as we all now hunker down, socially isolate to try to stay safe, and think about what the future might hold in store.

Resistance is Mutable: 5 Keys to Driving Technology Adoption in Financial Services

Technology is continuing its push to take over all aspects of customer workflow in financial services, from paperless onboarding to risk assessment apps to instant loan decisioning to algorithm-based portfolio construction. In fact, there are few aspects of the customer lifecycle that can’t be touched by technology. But “can’t be” is different from “won’t be” and that distinction often comes down to adoption by customer-facing personnel. While few technologies are perfect and there’s often a specter of tech replacing humans, in our experience neither of these is typically the cause of tech adoption struggles. More often than not, tepid adoption is due to a failure to appreciate the intensity of people’s resistance to change.

You may think that the current system is so inefficient/ineffective/clunky that everyone will love the new one, but that is not the case. Why? For starters, nobody likes to be told what to do. Moreover, even when people work with far-from-perfect systems and processes, they don’t always embrace the new, required solution because they have devised work-arounds that have become an integral – if imperfect – part of their routine. Finally, for customer-facing personnel, you can take whatever resistance exists and multiply it by 10 because those on the front lines of customer interactions are understandably anxious about using systems they don’t know and trust when under the pressure of dealing with customers looking for quick resolutions to their problems.

To overcome these obstacles and drive long-term adoption, here are five key components for success:

  1. Understand the audience. When you want to figure out how to get customers to buy, you seek out research and information about their attitudes, behaviors, and pain points to identify points of leverage. Driving adoption is no different. Sitting with, talking to, and watching future users in action will fundamentally shape how you should present the new technology to them and how you can communicate its value more persuasively.
  2. Appreciate their anxiety. Change is hard. As the saying goes, “better the devil you know than the devil you don’t.” Dismissing or underestimating the anxiety surrounding technology change is practically a guarantee that you will underinvest in driving adoption and will fall short of your goals.
  3. Calculate the impact. How much time saved? How much more accurate? And, most importantly, how do those gains translate into benefits to the users and their work? Most change management efforts come equipped with an ROI calculation, but these calculations are often based on a hypothetical future state, rather than the users’ current state. Identifying the time spent on activities today and the potential value of that time redeployed will lead to more compelling adoption communications grounded in reality.
  4. Market the change. Driving adoption means influencing behavior. Influencing behavior is the primary job of marketing (albeit one that typically applied to prospects). The same core elements of a successful marketing campaign – nailing the message, identifying the most effective communication channels, and measuring results – should be applied to your adoption efforts with all the rigor and discipline of a lead generation or customer retention campaign.
  5. It’s a marathon not a sprint. If you were launching a new product to a skeptical market, you wouldn’t promote it once at launch and then never again. Driving tech adoption must be approached the same way. It’s fine to launch with a splash, but if that isn’t supported by ongoing efforts to highlight successes, handle ongoing objections, and measure effectiveness, the opportunity for wide-spread adoption will be missed.

If these five components make driving technology adoption sound like a marketing campaign, that’s because it is. Many businesses talk about “selling” users on new technology but miss the most important inference of this language: before selling, you need marketing. A company may not get as excited about 95% adoption as it does about big, new sales deals, but the amount of money invested in new technology means that it should. A great but unused application has as much value to the company as a big but unsigned customer: None.