Reduce liability for losses on commercial accounts by adhering to four requirements.
Opportunities Seen by Alert Marketers
How are bank marketers responding to hits on their banks’ credibility and their bottom lines from regulatory fiats, the financial crisis and thinning margins? They are fighting back in a variety of ways, it turns out. A pair of healthy California banks, for example, believe now is a great time to reinforce their presence in their respective markets, while less fortunate financial institutions may be struggling with losses, nonperforming assets and regulatory orders. Other community banks in New Jersey and Pennsylvania are stressing a combination of traditional service and online offerings. And a bank in central Kansas is growing profitable deposits with a specialized checking account for consumers who have been turned down for conventional accounts, for whatever reasons.
Even as banks continue to recover from the financial crisis, it is now more important than ever to tout your bank publicly, say two California bank marketing executives.
“This is the perfect to time to market when you can get prime advertising space or negotiate any contract — while other banks may sit on the sidelines because they have other focuses, such as credit quality, orders or asset shrinkage,” said D. Monique Johnson, senior vice president and director of marketing and relationship management for Wedbush Bank in Los Angeles.
Angela Brusa, vice president and marketing director for the Bank of Stockton in Stockton, Calif., agrees.
“I think the economic environment and the perception of banks has been the greatest difficulty over the last couple of years, given the financial meltdown,” Brusa said. “With the economic downturn, there is always a strain on resources, and many banks begin cutting expenses in marketing, so it becomes even more challenging to maintain brand and achieve results with little to no budget.”
But it is precisely because of that challenge that banks must continue to stay visible in their markets, she said.
“Without market presence, consumers forget about us, and we lose our identity,” Brusa said. “People cannot choose you as a bank if they don’t remember you, or they see less and less of you. Decreasing market presence during tough times is not optimal. Having a presence makes our customers more confident in us as well.”
Both executives detailed how their banks reach their target customers through the use of various media channels, technologies, public events and even through the marketing efforts of trade associations such as the California Bankers Association.
The $197 million-asset Wedbush, which focuses on small business and commercial real estate lending, differentiates itself from its competitors by demonstrating the bank’s commitment to its clients and community, considering that its products and services are somewhat the same as its competitors, Johnson said. The bank is a unit of Wedbush Inc., also the parent of Wedbush Morgan Securities.
To reach its target audience, Wedbush predominately utilizes print, direct mail and web initiatives, and is currently researching how to capitalize on the popularity of social media, she said. TV and radio marketing are “too broad and expensive for our bank and expertise,” and the bank employs an advertising agency only on project-by-project basis.
Wedbush conducts public outreach events as often as possible, including mixers, open houses and charity events.
“Face to face interaction is critical for us,” Johnson said. “Getting our word out for a newer bank in multiple ways is important — PR is another of those ways.”
The use of technology is important for Wedbush, Johnson said. The bank currently offers consumer customers the ability to open checking accounts online, as well as conduct online banking activities such as checking balances or transferring money from other accounts. While most of the bank’s clients currently may not use mobile apps, Johnson expects the technology will become increasingly important going forward.
The $1.9 billion-asset Bank of Stockton uses a branding strategy as an umbrella for all its marketing messages, Brusa said. For specific products, it employes niche marketing that targets the demographics with the most likely propensity to want the product or delivery channel.
“Niche marketing is more targeted and can be measured more easily than brand presence, but both are critical to success,” she said.
For brand maintenance, the banks use media forms that can best reach the overall market, and for product promotions. Bank of Stockton prefers targeted measures such as direct mail, “which can be measurable for ROI.”
Bank of Stockton conducts targeted public events, such as an annual new lawyers reception, to attract more professionals to its wealth management and trust offerings, and seminars on managing closely held businesses, for its business customers.
The bank employs technology extensively, offering online banking, remote deposit capture, mobile banking and mobile alerts. Brusa said the features are not just popular with the younger generation.
“Individuals in all market segments like the convenience and power of managing their accounts through technologies such as Internet banking and mobile especially,” she said. “Our mobile alert package on security alerts, balance alerts and overdraft alerts has been well accepted by our customer base.”
Trade groups such as the California Bankers Association help its members “tremendously” because they provides articles, expertise and information that helps all of its members collectively to be better bank marketers, Brusa said.
“If your bank is experiencing a problem, you can bet other banks are as well,” she said.
Johnson said the biggest challenge for bank marketers is demonstrating to the C-suite how important the role is — “showing the department as a profit center.”
Brusa agrees that budgetary issues present real challenges, and so do the growing plethora of media outlets that force banks to market in numerous ways to be effective. But that is just one piece of the entire puzzle.
“Marketing is so much more than advertising and everyone is a part of the marketing process — each person and experience becomes the face of our bank,” she said. “The industry will have its ups and downs, but the rubber hits the road with customers. We can never forget their perception of us, and we have to continually work hard to provide an excellent experience, whether it is at the teller station, through our websites, out in public at community events or through social media avenues.”
Program Brings New Income
Everybody deserves a second chance, right? Well, maybe not everybody, but Central National Bank in Junction City, Kan., is growing deposits, fees and numbers of accounts with its “Second Chance Checking” program.
Designed for the nearly one-in-five prospective depositors turned down for a traditional checking account, this specialty product has generated impressive results over three years, according to data shared with attendees at the recent American Bankers Association’s National Conference for Community Bankers by Sara Girard, senior vice president-retail for the bank: NSF income of more than $660,000; service charge income and debit interchange income of more than $180,000 each; and monthly per-account average income of $30. And the bank gets Community Reinvestment Act credit for serving a previously underserved demographic segment.
Girard, one of the speakers for a special interest session at the ABA conference on redesigning retail strategies in the wake of regulatory reform and new rules for overdraft protection, also reported a 202 basis point improvement in the bank’s cost of funds due to growth in demand deposit accounts, reductions in certificates of deposit and market rate changes.
Central National has assets of $800 million and 38 branches in 23 Kansas and Nebraska communities, according to Girard. Junction City is also home to Fort Riley, the big U.S. Army base. The bank worked with Stratis Technologies of Louisville, Ky., in the design and implementation of the program.
Girard explained that account applicants who would have been turned down before based on their ChexSystems or QualiFile score, are offered either a New Opportunity Account or a First Step Account. The New Opportunity Account includes non-interest checking, unlimited check writing, debit card access, a monthly account fee of $9.99 ($7.99 with direct deposit), reduced ATM and POS daily limits. There is no overdraft protection and all NSF items are returned and charged by default. Consistent with Reg CC guidelines, holds are put on deposited checks not from a known or trusted source.
After 12 months and no more than two overdrafts, a customer in good standing may qualify for a conventional checking account. More than 250 participants in the program have graduated to other accounts, Girard reported.
Employee education and risk management are key to the program’s success, Girard pointed out. Cultural shifts may be necessary, she said, to convince staff that “bad things happen to good people” and the second-chance group is a class of customers the bank wants to serve. In addition, there is no need to apologize for charging a fee because the bank is offering a service for which it should be compensated.
Risk management includes daily account monitoring with Stratis Technology’s New Opportunity Manager software. Among items tracked are deposit activity and trends, levels of debit card use and returned deposit activity. The process guards against excessive NSF activity and employs a follow-up matrix and specific protocol for overdrawn clients. The tracking also identifies program graduates to be upgraded to a more traditional account.
Girard left the community bankers sitting in the special interest session with the thought that with proper risk management, Second Chance Checking can be a valuable addition to a financial institution’s product portfolio.
Marketing Strategy Marries Personal Touch with Tech Savvy
Combining the old and the new, community banks’ marketing efforts are maintaining a tradition of strong customer relationships while embracing technology and social media.
“For us, it’s about the relationship,” explained John Reissner, vice president and marketing director at Magyar Bank in New Brunswick, N.J. Aware of technology but still stressing the personal approach, the full-service bank holds client appreciation events. Inviting top clients to sporting events and theater outings has spurred growth over the last few years. “We’ve increased core deposits — checking and savings accounts — built around relationship management,” Reissner said, referring to individual and business accounts.
While he does not see Magyar Bank as a trend setter, Reissner noted that “technology for us is the great equalizer.” Citing remote deposit via check scanning, he declared it a deal changer that has brought in customers who have wanted to bank with Magyar for years. “It’s been a huge help in leveling the playing field with big competitors,” he stressed.
Dana Dobson, vice president, marketing manager at 3rd Federal, based in Newtown, Pa., also supports relationship banking enhanced by technology. “These days good customer service is a real differentiator,” she commented.
Full-service 3rd Federal provides free checking and unlimited check writing. On the technology front, it offers a full suite of Internet banking services on its website, including online bill payment and person-to-person payments through ZashPay.
Mobile apps are not offered yet, but the bank is interested in using printed tags that take consumers to a specific website when they point their smart phones at them. “We’re talking to a printer now about putting tags on business cards, ads, anything that’s print media,” Dobson said.
Getting the Most Media Bang for the Buck
A limited marketing budget poses a major challenge for marketers. “We have to make a nickel scream,” Dobson quipped. She is using local print and magazine advertising, direct mail and email, but not too much radio or TV because it is too expensive. “We’ve been dabbling in social media,” she noted. 3rd Federal uses Facebook and Twitter, and has an entire campaign in the works for YouTube, with one video already posted.
“We’re having pretty good success getting our name out,” said Reissner. For branding he uses radio, but prefers electronic media, primarily email blasts, for specific products. He has found local weekly papers effective, too. In addition to its website, Magyar Bank recently launched a Facebook page. It is planning a bank-wide blog whose contributors will include the president as well as staffers who will update important information, such as SBA regulations for customers benefiting from Magyar’s preferred lender status.
Community Outreach and Staff Incentives
Seminars and open houses targeted to personal and business customers can enhance a bank’s image and its bottom line. “Community partnerships are a big part of what we do,” Reissner observed. Magyar Bank hosts first-home club seminars in its community room; so far graduating more than 100 people. It also provides up to $7,500 in grants to first-time homebuyers. The bank makes the community room available to nonprofit groups on weeknights and Saturdays.
3rd Federal Bank plans to host a business education series once a quarter, moving it around among the bank’s 14 branches. “We’re also launching a financial literacy initiative,” Dobson added. “It’s the linchpin of our messaging. We’re creating a blog and will tweet the availability of these [monthly] seminars.” Financial education via Twitter and Facebook will be available, too.
Staff incentives complement community outreach. Magyar Bank has a program for frontline and back office staff. For example, when the mortgage department calls for closing information, it cross-sells additional products.
At 3rd Federal staffers are rewarded for their cross-sell ratio. Tellers focus on referrals to mortgage lenders, investment representatives and customer service reps, with this last group earning incentive compensation for selling additional accounts, debit cards, various loans and online services. Branch managers target loan portfolios and deposits. Business clients are encouraged to sign up for cash management products and e-deposit.
The Competitive Edge
How do community banks differentiate themselves? Magyar Bank focuses on relationship marketing, emphasizing top customers who provide valuable referrals. The bank also champions community involvement. “It’s our business strategy, not just a term,” Reissner explained. Bank staffers have supported more than 100 organizations during the past year, from Little League to walkathons.
3rd Federal rebranded several years ago with a bright, lime-green color it puts everywhere. Its “go green” motto represents both the bank and the environment. The bank built a LEED-certified (leadership in energy and environmental design) branch, which won a gold certificate from the U.S. Green Council. Asking customers to go green through e-statements and online banking helped 3rd Federal save $10,000 in printing and mailing costs last year.
Reissner’s and Dobson’s efforts show that marketing methods may evolve, but the concept of service remains constant.
Sections of this article were written by Libby Bruch, a contributing writer in New Jersey; Katie Kuehner-Hebert, a contributing writer in San Diego; and Editor-in-Chief Bill Poquette.
Copyright © May 2011 BankNews Media