Bank Marketers Face Challenging Times With Great Opportunity

After two years of responding to government intervention into the revenue structure of financial organizations, bank marketers are now faced with heightened levels of competition, a more demanding customer base, an unfavorable rate environment and, in many cases, a shrinking budget. But potentially most challenging to financial institution CMOs I meet in my travels is the ability to respond to the shift in the ways we interact with customers and prospects.

The flood of data, channels, devices and changing consumption patterns have marketing departments in financial organizations of all sizes trying to determine if they are prepared. They are reviewing the skills sets that will be required to take advantage of the opportunities these challenges present, and realizing that gearing up may require a heightened level of personal engagement from all members of their team.

These challenges are reinforced by a set of studies that I recently reviewed that surveyed marketers from all industries. IBM's 2011 Global Chief Marketing Officer Study entitled, From Stretched to Strengthened found that the majority of CMOs feel unprepared when it comes to the explosion of data available (71%), the impact of social media (68%) the growth of channels and devices (64.5%) and the movement from mass markets to micro markets (64.5%).

Benefits of Social Media Sign-In Must Offset Privacy Concerns

One of the most important yet tedious components of opening a new account account at a bank is completing the new account form. Whether done at a branch or online, the new account registration process is the first (and sometimes only) time when a bank can learn about a customer's needs, behaviors and expectations of the relationship.

Unfortunately, this process has changed very little over the years and is usually only comprised of gathering the most rudimentary of information from the potential customer (name, address, phone, social security number, account type desired, etc.) and collecting funds/obtaining a signature. The rationale for only collecting the most basic information has been to balance the desire for insight with a respect for the customer's time. This balance becomes even more important in the online world, where a customer can easily abandon the account opening process with little repercussion.

Online Account Opening Abandonment
According to a recent report from Javelin Strategy & Research entitled, 2011 Online Account Opening: Faulty Process Hobbles FIs in the Battle for Customer Acquisition Profitability and Retention banks lost close to $1 billion and 5.8 million customers due online abandonment during the account opening process over the past year. In fact, it was found that only 53% of new account applicants were able to successfully open and fund their new accounts. While some may later go to a branch, many new customers may be lost forever.

How Effective Is Your Bank's Social Media Strategy

Whether it is a company asking you to visit their Facebook page and 'Like' a product or brand or a peer wanting to keep in touch on LinkedIn, people are continually being driven to social networks according to Nielsen's latest report on social media. In this first report of its kind by Nielsen, it was found that social networks and blogs reach nearly 80 percent of active U.S. Internet users, and that social media accounts for 22.5 percent of the time Americans spend online. As expected, Facebook was by far the strongest social media brand.

In addition, it was found that nearly 40% of social media users access content from their mobile phone and that Internet users over age 55 are driving the growth of social networking through their mobile devices. As a result, "there is a need for companies to engage more strategically in the social space than they do currently," according to Radha Subramanyam, senior vice president for media and advertising insights and analytics at Nielsen.

Social Media Demographics, Nielsen Q3 2011 Report on Social Media

With networking continuing to increase, and the need to connect with customers and prospects in the most efficient and effective manner possible, more banks are using social media as part of their overall communications strategy. But, while interacting with customers through social channels can be effective, measuring the effectiveness of your marketing investment is no easy task. In fact, while many of the largest banks in the U.S. and overseas are leveraging many of the primary social networks, their strategies usually involve non-financial initiatives such as sweepstakes, charitable causes, etc. 

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.

Five Steps to Improved Customer Engagement Through Email

According to Peter McCormick, co-founder of one-to-one communications firm ExactTarget, there are five steps for engaging customers via email.

1. Express Gratitude: According to McCormick, fewer than 50% of marketers send a welcoming email thanking a customer for accepting communication from a brand. This should be the first step after a customer provides their email address. This communication also sets the tone for future dialogue so this is a great time to include a coupon for expansion of the banking relationship and/or a research report or white paper for a B2B client.
2. Take a Genuine Interest: Let the customer tell you about their communication needs and interests to enable more relevant content delivery. A preference center can achieve this where a customer expresses what they want to know going forward.

Building Long-Term Deposits and Relationships Automatically

Over the past several years there have been a number of financial institutions that have built automatic savings programs where customers can set goals, establish recurring transfers between accounts to fund the goal(s), and track their savings progress.

One of the first programs developed was the Orange Savings Account from ING Direct which greatly simplified the process of opening new accounts for various savings goals. Following the success of the Orange Saving Account, SmartyPig was another program with that same goal in mind, making it easy for a customer to setup savings goals.

A customer can name their accounts, set the deadline for reaching their goals and even use an interactive calculator to determine the amount they will need to set aside each month. What makes Smartypig unique is that they added a social element to the mix . . . allowing other people such as friends and family members to contribute to the customer's goals as well.

Using Social Media for Financial Services Marketing

As I travel across the country, more and more banks are dipping their toes in the waters of social media. While the banking industry has been slower than most industries to embrace social networking, the tremendous growth in social networks, the need to better monitor and participate in social network conversations that are taking place, and the value of reaching customers and prospects on popular social networking sites has banks using Twitter, YouTube Facebook and other sites. This almost instantaneous communication comes with new challenges for banks, however, including informality of communication, higher customer service expectations and another venue for customers to voice discontent.

Nate Elliott from Forrester Research has decided to research and write a report on how financial services marketers can most effectively use social media. He is hoping to include data on how different types of financial customers engage with social media and is also hoping to collect more insight from the bank marketers' perspective.

He is looking for financial services marketers willing to walk him through examples of how you've used social media, talk to him about how you manage risk and work with your legal and compliance departments, and share with him some of the lessons you've learned in social media marketing. He can be reached at nelliott@forrester.com.