Over the past year, most leading financial institutions have cut their marketing spend. As these firms face rising provisions for losses and declining revenues, they are look for other ways to cut costs, and marketing spend is squarely in their firing line.

Banks are pursuing different approaches to cut marketing spend, including: altering the media mix to focus on less expensive media; and reducing/eliminating marketing of certain products (e.g., many banks have pulled back on credit card marketing over the past year).  In addition, banks should focus on getting the most from their marketing, by ensuring that it is synch with other aspects of their business, particularly sales.

We have heard much in recent months on banks going “back to basics” and pursuing a relationship banking approach. One of the recent manifestations of this approach is the provision of financial needs assessment, which enables the banker to develop a closer relationship with the customer, as well as providing a platform for marketing financial products and services.

–In introducing new checking accounts, Fifth Third Bank is placing a good deal of emphasis on its free Financial Needs Assessment

–A recent U.S. Bancorp presentation highlighted that it is pursuing a relationship banking approach by offering relationship reviews as well as product packages. Almost half of new U.S. Bank DDA customers are selecting a Consumer Package.

Banks cannot just automatically switch from a product-centric to a relationship banking model.  In effecting this transition, marketing and sales support (in particular, training and providing support tools to branch personnel) play key roles.  In addition, product development needs to switch from a silo-based approach (often with different product units within a bank competing for the customer’s attention), to a solutions-based model, centered on customer needs and behaviors, and a longer-term payoff.