What's Next for Debit Rewards?

At a time when banks are trying to catch their breath from the reduced fee income impact of Reg E, the government has proposed a cap on interchange income that could equate to a 70%-80% reduction in fees that a bank can collect as part of debit card transactions. In travels across the country, it is clear one of the first casualties of these regulatory changes has been the reconfiguring or elimination of Free Checking at the largest banks.

Will these changes also eliminate debit card rewards programs that are funded by interchange fees?

Worldwide Response to the Importance of Cross-Selling

Last July, I posted a question on the Retail Banking Network Group on LinkedIn asking how the goal of cross-selling is prioritized in relationship to the goal of new customer acquisition at banks today. Since my posting, I have had more than 80 comments from bankers representing large and small financial organizations all over the world.

For instance, Lance van Wyk, Regional General Manager at Nedbank Ltd in South Africa believes that education, reward and recognition of employees is needed to improve cross-selling. In addition, he believes the timing of cross-selling is important and states, "Proactive investments in cross-selling at the acquisition stage could prove highly rewarding".

Reaching the ATM Customer With Intelligent Personalization

About a month ago, I visited my neighborhood branch office on a Saturday to open a few new accounts and was surprised to see the vast difference in customer traffic outside the branch compared to inside the office. More specifically, it was clear that the traffic outside the office was almost entirely for the ATM, since during my 30 minute visit only 3 people were served through the drive-up window while no less than 25 customers used the ATM. The manager even mentioned that she had offered the drive-up lane to the long line of ATM users, only to be told that, "we only need to make a withdrawal" (I guess many people don't remember the purpose of withdrawal slips).

While I realize the primary advantage of using an ATM is speed and convenience, are bank marketers missing an opportunity to expand communication through this channel? Having a captive audience, if only for a couple minutes, provides the opportunity to both target communications as well as collect insight.

The Sales Funnel Revisted

For my whole career, both in marketing and sales, I have understood the concept and importance of the sales funnel. Conceptually speaking, the traditional sales funnel starts with awareness being generated at the top of the funnel (the widest part) and then having the prospect work down the funnel through the stages of interest, consideration, commitment and eventually having a sale made at the narrowest part of the funnel. The funnel framework worked fairly well in providing the foundation for understanding what metrics should be concentrated on and where resources should be deployed.

But what happens in a world where prospects have so many more tools at their disposal to evaluate your offerings on their own or where they skip stages of the process all together?

Banks Need to Build Foundation for Effective Multichannel Marketing

While the BAI Retail Delivery Conference in Las Vegas doesn't officially begin until today, hundreds of attendees participated in a series of pre-conference workshops, including a session entitled, "Improving Acquisition, Onboarding and Cross-Sell Effectiveness with Multichannel Communication" which I was lucky enough to present with Matt Wilcox from Zions Bank and Tal Harry from Richter7. The workshop was attended by representatives from banks of all sizes and in various stages of multichannel marketing development.

During the session, we had several formal and informal surveys to determine where this limited cross section of the banking industry was with regard to their marketing mix.

New Smart Card Geared to Convenience and Safety Conscious Consumers

As banks continue to innovate around the use and rewards structure of both debit and credit cards, the penetration of smart cards in the United States has lagged other countries. That may soon change, however, after Pittsburgh-based Dynamics, Inc. won the first prize ($1,000,000) 'DemoGod' award at this week's Demo tech start-up conference in Silicon Valley.

Leveraging a programmable magnetic stripe that can be changed at any time (but still able to be read at today's magnetic stripe POS readers) the MultiAccount card can carry different card accounts on one piece of razor thin plastic.

What's in Your Wallet?

In the past, bank marketers have relied on models based on demographic, geographic, psychographic and purchase variables to better understand their customers and prospects. Some financial institutions even use attitudinal, lifestyle or customer value segmentation to improve the targeting of their marketing communications.

As consumers are provided more and more options as to how to transact business and make payments, however, a better way to segment may be achieved by using advanced behavioral segmentation based on payment decisions. In other words, when consumers open their checkbook, reach for their wallet, turn on their computer, or use their phone, what payment option they choose may help bank marketers improve targeted engagement, channel and relationship expansion communication.

Demand Generation Essential for Effective Lead Management in Banking

One of the biggest challenges facing small business bankers, mortgage loan officers, corporate bankers and trust officers is the ability to keep pipelines filled with qualified, sales ready leads. While marketing may execute programs that feed the funnel at the top, sales teams within the bank are still tasked with determining which leads are qualified and nurturing these leads in an environment where buyer behavior is less predictable and the evaluation of alternatives is being done more and more online and through social media.

In many cases, bank marketing and sales team are executing with conflicting strategies while working toward a common goal of generating sales. Leads are often provided by marketing before they are 'sales-ready', while sales is accused of not closing enough leads generated by marketing. This creates departmental conflict and lower sales team engagement due to the expectation of poor lead quality. In most cases, if a lead is not immediately sales-ready, no nurturing of the lead ev ntakes place resulting in program failures.

Post Financial Reform Checking: Fee, Free or Wait and See?

With August 15 in the rear view mirror, the impact of the new regulations around overdraft protection (Reg E) are beginning to be played out in the marketplace. While most of the larger banks, such as Bank of America, Chase and Wells Fargo have declared an end to free checking without stipulations, most small and some regional banks such as US Bank, Suntrust and Capital One have left the product unchanged while many of the large regionals such as PNC, KeyBank and others appear to be adopting a wait and see approach.

In fact, according to research released this week from Moebs Services, only 63.6 percent of the largest banks currently offer free checking compared to 92.6 percent in 2009, while community banks’ use of free checking declined only declined from 78.3 percent to 71.7 percent.

Small Business Acquisition Strategy Should Correlate to Potential Value

According to Barlow Research, a small business customer ($100K to $10MM in sales) will bring about $5,173 in Net Potential Revenue to a bank each year. This revenue estimate is based the value of short-term and long-term loans, demand deposit accounts and other business banking products balances and fees paid by a small business in 2010. Based on these revenue estimates, a shift in one percent of primary bank market share can increase the Potential Customer Lifetime Value of your small business banking portfolio by approximately $577 million.

Even with this potential, most banks are viewed as underserving the small business market according to research from Barlow, Aite Group, JD Powers, Greenwich Associates and others. The perceived brand of large banks (assets of $50+ billion) became especially tarnished due to big banks' questionable financial stability, slower responsiveness to small business requests and perceived dwindling appreciation for the small business customer. As a result, more small businesses than ever state that they are willing to consider a change in financial institution partner.

IAB Study Discusses Optimal Marketing Channel Allocation

Gone are the days of the Mad Men, when the marketing channels were limited and mass media was king. Today, there are more marketing channel options available and the attention of the consumer is more difficult than ever to capture.

As a result of this fragmented marketing mix, measuring the effectiveness of media spend and optimizing this spend is more complicated than ever. In fact, with the interactive channels (including social media) playing a vastly increasing role in establishing brand and product presence, and with tools like the DVR giving the consumer more control over their consumption patterns, the need to understand how to allocate budgets across marketing vehicles has never been more important.

Zions Bank Integrated Strategy Yields Results

I recently spent a couple days at a Marketing Summit with the Zions Bank direct marketing team and their interactive agency Richter7 in Salt Lake City and it was exciting to see the great results of their integrated marketing communications programs.

Not only have they lowered an already industry low attrition rate with their multi-touch onboarding program that uses direct mail, email and phone contacts of customers over the first 90 days of the relationship, but they have also seen a strong increase in account engagement, cross-sales and balance enhancement. Even using very conservative estimates, the ROI of the program far exceeds 400%, with enhancements still being introduced to improve these results.

Post August 15 Reg E Strategy Provides Opportunity

For the past several months, every bank I visit has been working tirelessly to educate and encourage customers to opt-in for OD coverage in response to Reg E. Multi-channel communications, including direct mail, email, outbound phone, statement inserts, online banners and in-branch literature have all been focused on helping customers understand the potential impact of the regulation while hopefully limiting the lost fee revenue associated with the regulation.

While the regulation took effect on July 1 for new customers opening accounts, banks realize that the real impact will be felt after August 15, when transactions are denied and overdraft fees can no longer be collected from current customers who have not opted-in. So what are your post August 15 strategies for customers who have not opted-in?

Bank 2.0 is a Bank Marketer Must Read

There are not many books (or anything else for that matter) that I find compelling enough to pre-order. Sure, there may have been a Cleveland Indians or Cavaliers championship jersey I jumped the gun on, but I have never stood in line for an Apple product or pre-ordered a movie to be the first on my block to own it.

I made an exception a few weeks back with the book Bank 2.0 - How Customer Behavior and Technology Will Change the Future of Financial Services by Brett King not only because I was intrigued by the title, but because I have been following Brett's Banking4Tomorrow blog for a couple months and I find his take on the changes in our industry both enlightening and spot on. King is also an international speaker and is an industry advisor on Huffington Post (Business News).

Can Banks Find Ways to Make Deposits Work Harder?

As was mentioned in yesterday's American Banker article, In Cash Glut, Banks Try to Discourage New Deposits, many banks are currently in a somewhat disadvantageous position of having an abundance of deposits at a time of depressed loan demand. With loan to deposit ratios dropping from a median of more than 105% to less than 95% in less than two years for the 15 largest banks, the excess liquidity is costing banks money.

This inability to earn adequate interest on these deposits, combined with lower overdraft fees and the potential for lower interchange income has banks that I am working with scurrying for ways to make up the revenue shortfall.

Responding to the Self-Directed Bank Customer

According to a soon to be published Accenture survey of senior banking executives from major banks across the world, there has been a significant power shift between banks and their customers that has resulted a lowering of customer profitability levels. The research entitled, Customer 2012: Time for a New Contract Between Banks and Their Customers?, found that nearly half of the executives have seen their average customer profitability decline by 5-15 percent since the beginning of the financial crisis.

According to Noel Gordon, global managing director of Accenture's banking practice and co-author of the research, “Consumers have emerged more confident in making financial decisions for themselves, more skeptical of their bank brands, more price-conscious and more willing to move away from institutions that provide poor service.

Newly Acquired Bank Customers Need to be Onboarded

Regulators closed six more banks last Friday, bringing the failure total this year to more than 100. As each of these banks failed, or as others have been acquired through mergers, healthier banks are expanding their geographies and gaining new customers along the way trying to benefit from efficiencies and economies of scale. Unfortunately, too much focus on cost savings and a lack of focus on the newly acquired customers can have unintended consequences.

This was found in a study done earlier this year by the Deloitte Center for Banking Solutions entitled, Beyond Day One: Minimizing Customer Attrition During Bank Mergers and Acquisitions. According to the study, 17 percent of respondents who had gone through a merger or acquisition had switched at least one of their accounts to another institution after their bank was acquired, while an additional 31 percent said they were at least somewhat likely to switch over the next year. The study further found that that those who had switched had more financial products and more investable assets than those who had not, making the potential revenue impact of lost relationships even greater.

Are Prepaid Cards an Emerging Threat to Traditional Banks?

According to a brand new report published by Mintel, the recent increase in dissatisfaction with banks, the expanding number of unbanked and underbanked households and the increasing cost of basic banking are all contributing to a growth in the prepaid card market as an alternative to the traditional checking account.

What should be disconcerting for bankers is that close to 20% of respondents overall stated that they would be interested in using prepaid cards to pay bills rather than using a banking account, with 25% of households earning more than $100K per year showing an interest. The primary reason for this interest was to avoid overdraft and other types of fees.

What Bank Marketers Can Learn From Apple

After two and a half weeks of waiting, a lost FedEx delivery and an eventual call and visit to a local Apple store, I am finally the happy owner of a 32GB 3G iPad. While the delivery experience wasn't as smooth as I would have liked (no fault of Apple), the device more than delivers on the promises made and the positive reviews.

The purchase, however, got me thinking about why I (and obviously tens of millions of others) feel so compelled to emotionally purchase devices from Apple that may not be perfect (no flash, no USB port and no camera) and will usually be outdated due to upgrades in a few months.

Onboarding Needs to Reflect Bank Customers' Diverse Preferences and Needs

According to a new Javelin Strategy and Research report issued today, many banks are not leveraging the insight available early in a new relationship to develop customized offers and to utilize preferred channels of communication. In their study entitled, 2010 New Account Onboarding: Using a Systematic, Tactical Approach to Deepen Financial Customer Relationships, the importance of collecting key pieces of information such as age, income and the customer's previous banking experience is emphasized. With this baseline insight, Javelin proposes that communication channel determination and messaging can be improved, thereby leading to improved engagement, retention and cross-sell results.

The findings in the robust 44 page study are a refinement of a previous Javelin onboarding study from 1997 and are consistent with what I have found visiting and speaking with banks across the country. In fact, two of my clients (Zions Bank and KeyBank) are referenced in the study.

Disconnect Seen Between Small Business Needs and Availability of Credit

While there are signs of the beginning of an economic recovery, many small and mid-sized companies are still finding it difficult to meet banks' tightened credit standards. This trend is reinforced by both a recent Greenwich Market Pulse Study as well as recent findings by Barlow Research which found that even though banks have a need to generate more loan relationships, more than 50 percent of small businesses say it is harder to secure credit this year than last. This would be in line with an American Banker study earlier this year that found that close to three-quarters of the U.S. banks had 'significantly tightened' their credit standards.

What is the Future of the Branch?

When was the last time you went into a branch to do any banking outside of opening a new account, closing an account, getting a mortgage or doing a mystery shop? Better yet, did you even go into the branch to establish your last financial services relationship? For me, I most recently opened a Virtual Wallet Relationship and never saw a banker in person. What was amazing about the experience is that I was 'cross-sold' a savings account, debit card, online banking, auto save and bill pay without ever feeling like I was sold or talking to a banker. I did it myself . . . all online.

So, what is the future of the bank branch? According to a channel preference survey conducted by the American Bankers Association (ABA) last August, 25 percent of consumers preferred to bank online as opposed to any other channel.

Cross-Selling is Key to Bank Revenue Growth

As the banking world is shifting from a supply-side, product-driven environment to a demand-driven one, the focal point of this new model is the customer. As a result, banks are going to need to change their operating models to adapt and align to this new reality. Only then can banks deliver a truly innovative and compelling customer experience.

Part of this transformation will be to develop key performance indicators (KPIs) that measure long-term performance such as loyalty as well as shorter-term measures such as cross-sell effectiveness, customer satisfaction and household profitability. With as much as 30% of the bank's customer base potentially being vulnerable and 'in play' according to an Accenture survey of banking customers, banks must commit the resources needed for actionable customer segmentation, new pricing models, needs-based solutions and a way to reach customers effectively and efficiently to grow relationships.

Onboarding Communication - How Much is Too Much

As I discuss multichannel new customer onboarding program development with financial organizations, it doesn't take long before the client asks about how much communication is too much early in a new relationship.

Interestingly, according to our research at Harland Clarke as well as research from J.D. Power, the number of new products sold and the customer satisfaction ratings both increase as the number of contacts increase during the first 90 days. In fact, according to J.D. Power, the average number of accounts sold increases from less than 2.5 to more than 3 if the customer is communicated with 4-7 times or more. In addition, the satisfaction ratings increase by more than 10% if more connections are made with the customer who opened up a new account.

Optimism and Better Results Reported in Recent DMA Quarterly Business Review

In the most recent DMA/Winterberry Group Quarterly Business Review (QBR) for the first quarter of 2010, the Direct Marketing Association in conjunction with The Winterberry Group found that both direct and digital marketers have seen improved performance in terms of revenue, marketing expenditures and profitability compared to the previous quarter and the same quarter last year. Moreover, both marketers and service providers have optimism that this growth will continue, albeit at a slow pace.

Drop in Loyalty and Impact of Premiums Should Concern Bankers

According to the 2010 U.S. Retail Bank New Account Study released by J.D. Power yesterday, large banks captured a higher proportion of prospective customers compared with regional banks. Based on responses from 3,770 consumers who shopped for a new banking account or a new financial institution during the past 12 months, larger banks acquired 70 percent of prospective shoppers while regional banks secured only 59 percent of these shoppers.

According to the study, the higher capture rate by large national banks was significantly impacted by the use of promotional gifts and attractive short-term interest rates, with 24 percent of those opening an account with a large national bank saying that was the primary reason for selecting the bank (compared to only 13 percent for regional bank customers).

Thinking Like Your Customer

Yesterday, I received a thought provoking Harvard Business Review blog from Scott Anthony, Managing Director of Innosight Ventures entitled, Think and Act Like Your Customers, where he discussed that many marketers surround themselves with what they produce as opposed to placing themselves in the position of a customer of their competition.

He pondered the fact that we may receive lots competitive intelligence from research decks and market studies, but we sometimes miss the simplest form of insight that can be derived by having our employees (or ourselves) use the products and services of the competition.

Ten Steps to Onboarding Success

Later today, I am presenting at the Oregon Bankers Association 105th Anniversary Convention at Sunriver Resort on the topic, Stemming Attrition and Building Relationships Through Effective Onboarding.

In addition to sharing recent statistics from J.D. Power and Associates around the positive impact of increased attention early in a new relationship and the positive impact of using multiple communication channels from case studies across the banking industry, I will be sharing the ten key steps to onboarding success that I have seen over the past five years.

The Mobile Banking Response to Reg E

In a June 9 webinar entitled, Mobile Alerts and Reg E presented by Javelin Strategy & Research in conjunction with ClairMail, there was a great discussion of how mobile banking and financial alerts can play an integral role in both the opting-in process and the enhancement of the customer experience after August 15.

By providing enhanced information about the customers accounts and allowing the customer to be 'in control,' the perceived value of mobile banking can be enhanced. In addition, the ability to use mobile banking alerts to help avoid OD and NSF fees enhances the value of the device even more. It was mentioned that as many as 90% of customers who receive alerts will actually take action based on the alert (through signing on to their online banking account (33%), calling (33%) or visiting the branch (14%)).

Effective Onboarding Begins with Good Insight

In 2003, the BAI released a research study entitled, 'The Ninety Day Window of Opportunity', where interviews, deposit statistics and segmentation models revealed that nearly 75% of all cross-sell opportunities and the vast majority of attrition occurred in the first 90 days of a new customer relationship. These findings continue to be verified in the marketplace, with expanded concern recently around the lack of funding, engagement and use of new products by these new customers.

More than ever, financial institutions need to begin the onboarding process by capturing an accurate and robust view of the customer which can be used across the organization to enhance the customer experience and expand the relationship with the bank. In short, to optimize the customer experience during the first critical months and year of the relationship from both the customer's and bank's perspective, you need a 360 degree view of the customer. With online account openings, this process becomes even more critical.

Mobile Banking Can Improve Customer Acquisition by Sixty Percent

One of the more startling takeaways from the Mobile Banking and Emerging Applications Summit this week was when Bob Hedges from Mercatus mentioned that mobile financial services could improve customer acquisition rates by as much as 60% in key customer segments (age under 50) for early moving banks. In fact, according the research findings which were presented at blinding speed at the conference, a bank's mobile presence was more important than online banking, ATM presence or even the convenience of local branches in a customer's decision to select a bank.

PNC Uses Social Media to Support Reg E Efforts

It appears PNC Bank is leveraging all available channels in their effort to capture as many opt-ins as possible. Today, I received a Tweet from PNC Virtual Wallet offering a description of the difference between overdraft protection and overdraft coverage. The message directed me to my Inside the Wallet Blog within the Virtual Wallet online banking site.

On the Blog, PNC innovation and Virtual Wallet leader Michael Ley, describes the options a customer has as to whether to opt-in or not with his post, "To “Opt In” or not “Opt In”… What is the Question?". Illustrations are used to help describe the options a customer has.

Mobile Banking Summit Illustrates Topic is Hot

You don't need to look any further than the attendee list to realize the importance of mobile banking to our industry. Not only is almost every major institution in attendance at this year's Mobile Banking and Emerging Applications Summit, but the number of participants has increased by more than 50% according to officials from SourceMedia.

The program kicked off Sunday with a workshop by David Eads, Founder & CEO of Mobile Strategy Partners LLC where he discussed the basics of getting a Mobile Banking strategy off the ground. He also shared the first of a wave of industry statistics that made it clear to the SRO attendees that this year and next will be pivotal to the mobile banking industry. He also shared keys to developing a business case for introducing mobile banking. He emphasized that while cost reduction (mainly from offloaded balance inquiry calls) could many time justify the investment in mobile banking by itself. a drop in attrition and an increase in revenue from increased interchange and cross-sales will also improve the ROI.

Chase Introduces Instant Action Text Alerts to Allow Customers to Avoid OD's Immediately

In the February 2010 Javelin Strategy and Research report on financial alerts, some of the major flaws of current alerts included difficulty of setting alerts up, lack of timeliness, not actionable enough and poorly marketed. In addition, the research found that one of the highest utility features from both a customer and bank perspective is the ability to alert and respond to potentially insufficient funds.

Expanding on their very popular low balance alert mobile banking feature, Chase Bank just introduced a new feature that addresses many of these flaws by allowing customers to easily respond to a low balance alert from the bank by immediately transferring funds through text messaging.

Alternatives to Online Bill Payment May Drive Stronger Engagement

Research has shown that one of the strongest engagement tools for new and existing checking customers is to have the customer set up online bill payment. Unfortunately, even with aggressive 'switch' programs, the success banks have had trying to get customers to sign up for online bill payment has been less than overwhelming.

To try to simplify the signing up for online bill pay (and reduce first year attrition), some banks have moved to promoting the payment of bills using debit and credit cards. In the case of using a debit card, the payment still is taken from a customer's checking account and the process for signing up can actually be easier than with a traditional biller. In addition, using a debit card for bill payment can generate interchange income for the bank, rewards for the customer, and if the payment is recurring, it will not be subject to the new Reg E stipulations.

Reg E Opt In Results Better Than Expected

As I travel across the country and talk to bankers about their early Reg E opt-in results, many are experiencing significantly higher than expected acceptance rates. In fact, some banks have indicated that they have achieved opt-in rates of as high as 85% or more from the highest impacted segments (those who have the highest use of overdraft coverage) and more than 95% from new customers who are opening a new account.

This level of acceptance should provide some comfort to financial institutions who have been concerned about a massive outflow of fee income as a result of Reg E beginning on August 15. Alternatively, this level of opt in sets the bar rather high for those organizations who have either not begun their Reg E communication or had thrown in the towel expecting customers to opt out on a massive basis.

Use of Online Banking and Bill Payment Continues to Grow

According to the 2010 Consumer Billing and Payment Trends survey published this week by Fiserv, the number of households that use online banking increased more than six-fold between 2000 and 2010, and the number that use online bill payment increased nearly eight-fold. In fact, 72.5 million U.S. households (80 percent of all households with Internet access) use online banking, while 36.4 million households (40 percent of all households with Internet access) use online bill payment.

Illustrating that online bill payers are not just the youngest and wealthiest demographic, in 2010, consumers age 21-34 made up 28 percent of online bill payers, consumers age 35-54 made up 48 percent, and consumers over age 55 made up a surprising 24 percent of all online bill payers, while more than a third of online bill payers had a yearly household income of less than $50,000.

Interchange Amendment Could Change Reward Programs

As if we haven't seen enough regulatory changes over the past 12 months with the Card Act and Reg E, now there is the possibility that Washington will limit interchange fees for debit transactions.

As noted in a recent Client Briefing from Celent Research, part of the proposed legislation requires the Fed to determine a “reasonable and proportional” interchange fee, which is no easy task given that interchange fees are there to balance the incentives in the payment system and tend to cover such difficult-to-quantify items as the payment guarantee and convenience.

In other words, the government can't look at just the operational and fraud prevention costs. In addition, current interchange fees differ by sector and are not standardized currently.

Banking on Social Sites Unlikely

According to a new research report by Forrester, Banking On Social Sites Is A Work In Progress, while social networking sites have a 30-day active population of more than 400 million users of which more than half visit on any given day, that love doesn't extend to banking through social networks. In fact, more than 70% of online households surveyed showed little or no interest in accessing their accounts through social sites like Facebook. Not surprisingly, the reasons for the lack of interest revolves around privacy and security concerns more than anything else.

So, while the majority of large financial institutions continue to look for more ways to leverage social networking's ability to engage customers, resolve problems and ultimately build loyalty, the reach of these sites beyond stronger interactive communication remains to be seen. At the very least, consumers will need the stronger security guarantees, authentication and more that is already afforded customer who use online and mobile banking.

Comparing Results to Industry Norms

I am frequently asked about what response rate a client should expect based on 'industry standards' or results from similar programs at other financial institutions. While the DMA does compile statistics and reports on direct marketing response rates with their Response Rate Trends Report, and there are other tools available from alternative sources such as MarketingSherpa, there are significant flaws to using general standards or even the results from another bank's program as a guide for setting expectations.

Be Careful of 'Mental Opt-Out' With Email Marketing

For those who read my Blog, you know that I feel strongly that the email channel is significantly underutilized by the banking industry. Not only do marketers not effectively leverage this channel in conjunction with other direct and mass marketing options, most banks do a terrible job at even collecting email addresses in the first place.

Unfortunately, for those who have begun to use email marketing in support of customer communication efforts, some have gone to the opposite extreme by viewing email as a 'free' marketing tool without giving adequate thought to the importance of relevancy. As many realize in their daily scanning of their email in box, overusing the email channel can have a detrimental effect of the value of this channel and negatively impacting the overall customer experience.

Banks Can Accelerate Revenue Growth by Managing Digital Experience

According to the March issue of the McKinsey Quarterly, digital channels can assist companies in unifying the customer experience and help move customers from interest to loyalty. In the article, "Four Ways to Get More Value From Digital Marketing", David C. Edelman discusses how companies can increase revenues through a better coordination of the digital end-to-end experience (see exhibit).

By focusing on the capture of a larger amount of Internet traffic through improved mass media key word positioning and SEO, increasing customer engagement through easy to navigate sites and targeted messaging, converting more of the digital leads to sales with strong offers and building digital loyalty through online and offline channels, revenues can be optimized.

Seven Predictions for the Future of Banking

Today, Susan Wolfe, Vice President of Financial Services from Mintel Comperemedia, presented a webinar entitled, "Seven Predictions for the Future of Banking" where she explored trends in the industry based on the research and direct marketing examples from their custom consumer surveys and mail panel. Each of these trends correlate with what I have seen in the marketplace even though many trends have been impacted by the massive influence Reg E has had on the focus of many bank marketing departments over the past few months.

The predictions presented in the Webinar were:

Innovation as a Growth Engine

Apple officially confirmed today that it has sold 1 million iPads. According to the press release, the company sold its one millionth iPad on Friday, April 30, just 28 days after the device’s release. More than 12 million apps from the App Store and 1.5 million e-books have been downloaded from the new iBookstore.

“One million iPads in 28 days—that’s less than half of the 74 days it took to achieve this milestone with iPhone,” said Steve Jobs, Apple’s CEO. “Demand continues to exceed supply and we’re working hard to get this magical product into the hands of even more customers.”

Is Cash Really King?

The competition is again heating up in the checking account cash wars. In addition to banks that have traditionally offered cash incentives to open checking accounts such as JPMorgan Chase, Capital One, Fifth Third and PNC Bank, banks that in the past have offered premiums for the opening of new accounts like KeyBank are now also joining the money for checking acquisition game.

While incentives with some institutions are still $50-$75, many of the more aggressive institutions are offering rewards of $150-$200 to new customers that open accounts and meet some qualifying stipulations such as signing up for direct deposit, online billpay or a minimum number of signature debits. A recent program by Capital One offering $300 for a new account was the highest premium seen in years.

Online and Social Media Emphasis Grows

As the focus on marketing spend is magnified and marketers are asked to do more with less, marketers are continuing to increase their online and social marketing strategies, according to the CMO Council's 2010 State of Marketing report.

The global affinity network, which surveyed 600 of its members from across the world and representing most industry verticals, found that 46% of its members ranked investing in digital demand generation and online relationship building as a top initiative for 2010. The survey also found that 62% will be crunching customer data to improve segmentation and targeting. Most of the respondents plan on doing much of the heavy lifting internally or by specialized outsourced providers.

Cardlytics Introduces Bank Statement Innovation

At a time when banks are looking for ways to generate new revenue and increase customer loyalty, Cardlytics has developed a way for banks to leverage transaction data to deliver targeted offers to clients on their online bank statements.

Since the privately held company launched the innovative product last November, more than 100 marketing campaigns have been run, reaching half a million bank customers. According to a recent AdvertisingAge article, the company expects to have 50 to 70 financial institutions on board by the end of the summer, reaching some 10 million customers by the end of the year.

Wells Fargo Promotes Online Statements

Emphasizing the potential positive impact on the environment and the reduction of risk from mail fraud and identity theft, Wells Fargo just introduced a sweepstakes program for customers who move from paper to online monthly statements.

For every personal or business statement selected to move to a paperless option, the customer will receive a sweepstakes entry with a chance to win $25,000 or one of ten $2,500 prizes.

This newest effort is consistent with what is offered by Wells Fargo Advisors, whereby clients have the opportunity to reduce their annual fees by $30/yrs. by opting for online statements.

SIFMA Asset Management Account Roundtable Recap

I would like to thank the people from the Securities Industry and Financial Markets Association (SIFMA) as well as co-chairs Jennifer Byrd from Morgan Stanley Smith Barney and Steve Newcamp from Federated Investors. As always, the event was well attended and the sharing of ideas and insights from the speakers and participants was great. I would be remiss if I didn't also thank my own company, Harland Clarke for the amazing dinner at the Battery Park Gardens Restaurant where, even with the rain, the view of the Statue of Liberty was super.

Some interesting takeaways from the meeting:

Chase Uses Safety Message to Promote Signature Debit

Chase Bank has recently reached out to their converted WAMU customers who are receiving a newly branded debit card asking them to "always select 'credit'" when paying for their debit card transactions, stating that the transaction is actually safer than entering a PIN.

The slightly confusing message has not gone unnoticed by industry experts who have come out on both sides of the argument around safety. According to an article in the April 21 edition of American Banker, consultants from Gartner and Aite believe that the PIN provides an added level of security, and that the Chase message may be driven more by the opportunity to generate the higher interchange income associated with a signature based transaction as opposed to a PIN transaction.

BAI Checking 2.0 Executive Forum Recap

I just finished presenting at the second BAI Checking 2.0 Executive Forum in Chicago where close to 50 financial institutions learned about legislative changes, customer perceptions, new product development and marketing opportunities around the checking account. While only a month has passed since the first Checking 2.0 Executive Forum held in Atlanta, it is obvious that there are a number of changes occurring in the marketplace.

There was consensus among the participants that while consumer trust and confidence in banks has been negatively impacted by the events of the past two years, there may be some uptick in these measures over the next few months if financial results continue to improve and if banks continue to focus on the customer experience.