Category Archives: Marketing

Banks Optimize Engagement With a Diverse Content Mix

Many banks are amping up their investment in content development. This is being driven by growing customer demand for financial advice, changing customer perceptions of financial providers and a need to differentiate from both established and new competitors.

Traditional content channels for banks include content-and-advice portals, surveys, blogs and newsletters. But it’s becoming obvious that banks looking to develop a robust and client-centric strategy are leveraging both established and emerging contact forms and channels – including videos, infographics, webinars, podcasts and of course social media platforms
– to meet customers’ changing consumption patterns.

Established Content Forms/Channels

Portals

Most leading banks provide portals that offer a combination of advice and content tailored to specific customer segments, such as:

Recently, bank-wide portals, which are then categorized into various business segments, have started to appear. Examples include U.S. Bank’s Financial IQ and Regions Bank’s Insights.

Surveys

Banks have been using customer surveys for years to both gain insights into changing perceptions and behaviors, and to highlight the bank’s thought leadership in specific areas of the market. A growing trend is for banks to carry out recurring (annual, quarterly, monthly) surveys, which are designed to generate regular press coverage and ongoing customer engagement.

Newsletters

A number of banks have recurring newsletters that they either publish online or distribute via email to opted-in subscribers. Many of these newsletters are titled “Insights”, including Regions Bank’s Wealth Insights and Commercial Insights magazines, which reflect the content and branding on the bank’s Insights portal.

Blogs

Blogs are also well established. They tend to emphasize financial education and well-being, and often have appealing names, such as MoneyFit (BBVA), do it right (Ally) and MoneyLife (MoneyLion).

Emerging Content Forms/Channels

Banks are also starting to develop and promote content on emerging content channels, such as webinars, webcasts, podcasts, videos and social media.

Webinars and Webcasts

During the pandemic, as banks were unable to host live events, webinars and webcasts became a key channel to maintain customer and prospect engagement. These channels have been most prevalent in the commercial banking space with the rollouts of new webinar series by BMO Harris (Expert Conversations), JPMorgan Chase (Treasury & Technology Trends) and M&T Bank (Managing Through Challenging Times). In consumer banking, JPMorgan Chase launched the Chase Chats webcast series.

Podcasts

In the past year, many banks also developed podcast series – including Bank of America (Treasury Insights) and Regions (Commercial Insights) – for commercial banking clients.

Videos

Banks have been using video to spotlight local small business owners, while helping to promote the bank’s local connections. Examples include Huntington Bank’s Support Local video series featuring real small business owners and Webster Bank’s similar small business video series called The Moment.

Social Media Channels

Finally, banks are using their social media channels not only to promote content that is provided through other bank channels but also to present new content, which allows the bank to extend its reach to customers and prospects who might not use the other channels.

Key Takeaways

To develop a multifaceted content strategy, consider the following:

  • Create a dedicated unit for continual content development, publication and promotion
  • Understand target market content needs and consumption patterns
  • Develop a consistent look-and-feel; create templates and guidelines to support seamless content provision
  • Develop a communications plan to promote the value of content development to internal stakeholders
  • Maintain ongoing customer engagement with recurring content (e.g., series of webinars, recurring surveys)
  • Where appropriate, use the content as a prospecting tool by listing relevant executives (with titles, emails and direct phone numbers)
  • Brand the content (e.g., give names to surveys, podcast/webinar series)
  • Identify best practices within the banking industry and from other industry sectors
  • Establish feedback channels to identify content needs and gaps

Bank M&A Activity Increasing in 2021: Marketing’s Key Role in Merger Success

(The blog was originally posted in April 2021, and updated in July 2021.)

In recent months, there has been a series of significant U.S. bank M&A deals:

There has also been a regular stream of smaller bank acquisitions. Deals announced in recent weeks include:

  • Valley National Bancorp ($41.2 billion in assets) and Westchester Bank Holding Corp. ($1.3 billion)
  • SouthState Corp. ($40.4 billion) and Atlantic Capital Bancshares ($3.8 billion)
  • FNB Corp ($38.4 billion) and Howard Bancorp ($2.6 billion)
  • United Community Banks ($18.6 billion) and Aquesta Financial Holdings ($752 million)
  • Columbia Banking System ($17.3 billion) and Bank of Commerce ($1.8 billion)

In addition, banks are not just acquiring other banks in their entirety, but are also acquiring financial assets to plug gaps in their geographic reach or product portfolios. Recent examples:

  • In May 2021, Citizens Financial announced the acquisition of HSBC’s East Coast branch network as well as its national online deposit business.
  • In June, Regions Bank announced the acquisition of EnerBank USA, a home improvement lender.

We expect M&A activity to remain elevated throughout 2021, driven by the following factors:

  • The disruption in normal M&A activity in 2020 due to the COVID-19 pandemic likely means that potential deals put on ice over the past 12 months may come back to the fore.
  • Multiple industry surveys show a strong appetite for bank deals.
  • The current very-low interest rates will hinder organic growth opportunities.
  • Regional banks want to build scale to compete with the super-regional and national banks.
  • Acquisitions can help banks fill gaps in their product portfolio.
  • Banks are also interested in divesting units that they do not consider to be part of their core operations, and these units may be attractive to other banks looking to expand in these areas.
  • The potential for more deals between banks and fintechs is great, as banks look to build their digital capabilities, and fintechs look to grow their banking operations.
  • There has been a long-term trend of bank consolidation. Although the number of U.S. banks has declined by 35% over the past decade, there is a broad consensus that there are still too many banks in the U.S.

In announcing their deals, bank have been highlighting a number of potential benefits and opportunities. The following are some key areas where marketing departments will play a crucial role to turn this potential into reality:

  • Auditing of Marketing Assets…Including Personnel. Banks should conduct detailed audits to identify each bank’s relative strengths in various marketing categories (e.g., a legacy bank might be strong in content generation and social media, but weak in advertising campaigns and branch merchandise). It is also important to assess each marketing department’s levels of expertise and experience.
  • Brand and Logo. The first question for marketing to address: what is the brand post-merger? Most mergers simply use the acquiring bank’s brand, but there are situations where the acquired bank has stronger brand equity. And there also also examples of merging banks creating a new brand (e.g., BB&T and SunTrust merging to form Truist).
  • Positioning and Value Proposition. The merged bank’s marketing team will need to develop new positioning, value proposition and messaging that not only encapsulate the combined bank’s new identity and priorities, but that also aim to recognize the heritage of each bank.
  • Customer Migration. One of greatest threats to a successful bank merger is the disruption and potential attrition in migrating clients to the new bank (with clients dealing with potential unfamiliar platforms, processes and personnel). To optimize retention, marketing needs to conduct a comprehensive audit of all customer touchpoints and develop a detailed plan to update all customer-facing systems, processes and correspondence.
  • Branch Rationalization (and Investment). Bank mergers typically have specific cost-cutting objectives, and branch closures are one way to help achieve this objective, by eliminating overlapping branches and reducing branch density. However, the branch network will continues to perform key roles for bank in service, sales and marketing. The merger provides a perfect opportunity for banks to reposition, redesign and re-equip branches to perform these roles into the future.

In summary, marketing plays a critical role in ensuring the ultimate success of any bank merger. Furthermore, the head of marketing/CMO should have significant input into the merger process, both pre- and post-merger.

Banks Cut Marketing Spend in 2020, But Expect to Ramp Up Investment in 2021

A detailed analysis of FFIEC call reports revealed that leading banks significantly reduced their advertising and marketing expenditure in 2020. However, as the economy rebounds strongly from the economic downturn caused by the coronavirus pandemic and increased competition from new entrants, banks seem poised to ramp up their marketing spending in the second half of 2021 and beyond.

Change in Marketing Spending Between 2019 and 2020

EMI Strategic Marketing studied data from 28 leading banks and found a 17% decline in advertising and marketing budgets, to $451 billion. This decline follows increases of 7% in 2019 and 15% in 2018.

Although most banks cut their marketing budgets, some banks bucked this trend, actually increasing their 2020 marketing spending:

  • Most notable in this regard was American Express, which at nearly $3.5 billion already has the largest advertising and marketing budget among leading U.S. financial firms. It spent $1 billion in 4Q20 alone as it ramped up investments in new card acquisition. Furthermore, it plans to continue this investment and recently reported that it could spend up to $4.5 billion in marketing in 2021.
  • Direct bank Ally Bank launched a new online advertising campaign in September 2020, which contributed to an 8% y/y increase in its marketing spend, to $161 million.
  • Challenger bank Radius Bank increased its advertising and marketing budget by 45% to $1.9 million in 2020, although its marketing ratio fell from 2.6% to 1.7% as its revenues jumped by 127%. (Radius Bank was recently acquired by LendingClub.)

It is also worth noting that some banks cut marketing budgets in 2020 following a ramp up in spending the previous year. A good example is BBVA, which grew its marketing budget from $83 million in 2017 to $111 million in both 2018 and 2019 as it changed its brand name from BBVA Compass to BBVA. It then cut the budget back to $76 million in 2020.

With Wells Fargo cutting its budget by 45% to $600 million, it reduced the number of banks with billion-dollar marketing budgets to five (American Express, JPMorgan Chase, Capital One, Bank of America and Citi).

Trends in Bank Marketing Ratios

The average 2020 marketing ratio was 2.8%, down more than 40 basis points from 2019, and back at levels seen in 2017.

Only 3 of the 28 banks – American Express, Ally and Bank of the West – increased their marketing ratios in the past year.

American Express and Discover – which have national card franchises that account for a significant percentage of assets and do not have to support branch networks – have the highest marketing ratios. Capital One’s marketing ratio is a mix of its card unit (6.8%) and retail bank unit (3.1%). Regional banks tend to have marketing ratio of 1% to 3%.

It is interesting that digital banks like Ally Bank, Axos Bank, Radius Bank and CIBC U.S. – which like American Express and Discover do not have to support branch networks – have marketing ratios that are in line with their regional bank competitors. This can be attributed to a number of factors, including devoting significant time and resources into improving the digital experience rather than brand advertising.

Bank Marketing Spend Trends for 2021

Looking forward to 2021, we expect that bank marketing spend will recover as the economy gradually reopens following COVID-19 (The Congressional Budget Office expects real GDP to return to pre-pandemic levels by mid-2021). Many banks have signaled their intent to increase their marketing spending in 2021. JPMorgan Chase stated that it expects marketing spend to return to pre-COVID levels in 2021. And while Citi’s marketing spend fell by 20% in 2020, it actually grew spending 2% y/y in 4Q20.

Bank marketing budgets will be impacted by growing merger and acquisition activity in the industry. Mergers that are expected to be completed in 2021 include First Citizens and CIT, Huntington and TCF Financial, PNC and BBVA USA, and M&T Bank and People’s United. Merging banks typically highlight long-term cost savings, but there will be a critical short- to medium-term need for marketing investment as they create new branding, launch new advertising campaigns, update branch signage, and revamp digital and social media channels).

While overall bank marketing spend is likely to recover in 2021, the composition of marketing budgets should change, in particular due to banks investing more in digital and social media marketing channels to match customer preferences and behavior. In addition, banks will be developing new messaging to address post-pandemic financial challenges and to communicate an effective and consistent experience across all their service channels.