The Impact of the iPhone 5 on Bank Marketing

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is the senior vice president of corporate development for the direct and digital agency New Control focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

So, the anticipation is over and the newest version of the iPhone has been introduced. When all was said and done, there were few surprises left as to what the iPhone 5 would offer, and for those of us who were crossing our fingers for the possibility of NFC integration (and further payments disruption), there may have even been a bit of disappointment.
And while additional enhancements to the Passbook app provides a glimpse into the potential for a head on competition with Google Wallet for payments supremacy in the future, the shop-with-your-phone coupon capability is not applicable to most bank marketers. What should be of more importance to bank marketers is the additional marketing real estate provided with the new phone and the growth in sales that may be on the horizon.

Bank marketers should see promise with the iPhone 5′s larger, 4-inch screen with Retina display which provides 18% more pixels for delivering enhanced mobile ads, banners, landing pages and interactive campaigns. While the extra pixels may not seem like much, it moves the iPhone experience closer to that of the iPad, which has already proven itself to be a major tool for consumer consumption. And for those who are still tablet-less, it is possible that this new device will a bridge for engaged behavior.

According to Rachel Pasqua, vice president of mobile at digital agency iCrossing, “the enlarged iPhone is enough to make mobile creative a little more eye catching and get more users more deeply engaged.” She mentioned that there will also be less potential for mis-clicks leading to better potential interaction. The potential for greater speed through the LTE and the new iOS6 also will help.

Charles Golvin from Forrester Research noted in a recent post that while other competitors already offer a larger canvas in some cases, “Apple still outpaces the competition when it comes to the entire package — the new iPhone unites significant improvements in industrial design, imaging, audio and connectivity, along with the wealth of new capabilities that iOS6 enables.”

The key for bank marketers is that iPhone 5 users, and smartphone users overall, will be spending more time with content on their phone. It is therefore important to provide the level of content that optimizes both the customer experience and marketing potential of the new devices. Consumers are no longer content with static web pages and difficult to use links and landing pages. Content (web pages, banners, ads, landing pages, etc.) will need to be easier to interact with and be more dynamic.

There is no way of knowing how popular the new iPhone 5 will be in the marketplace, but if the past is any indication of the future, not only will many current iPhone users upgrade to the new model, but the overall iPhone penetration will increase as well. As shown below, nearly 2 in 5 of the 38.2 million Americans using iPhones are on the iPhone 4, which was released just 2 years ago. More impressive than that is the fact that 35% of iPhone users today are on the iPhone 4S, which was introduced less than 12 months ago.

Just as with the tablet, bank marketers should realize that simply ‘super sizing’ a current app or website is no longer enough from the customer’s perspective. It is important to leverage the tools and advancements that are available with the newest generation of phones.

And even though our industry does not have products that are as visually appealing as in retail and other industries, the challenge to differentiate our offerings may be greater, but the opportunity is still significant.

10 Resolutions Bank Marketers Can’t Ignore in 2012

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

2011 was year that many bankers, and especially bank marketers would love to forget. Not only was focus diverted by the need to respond to new regulations for the second consecutive year (this time it was the Durbin Amendment), but the image of our entire industry was challenged as foreclosures and bank failures continued to be in the news.

We didn’t do ourselves any favors in 2011 either, as some of the larger banks learned the power of social media when they decided to increase (and then rescind) debit card fees, or when the industry fought internally with Bank Transfer Day.

The biggest impact of all of this noise was that attention was diverted from what should have been accomplished in 2011. As I reviewed my post from last year, Ten Bank Marketer Resolutions for 2011, it is clear that most bank marketers lacked the time/focus to make much progress on any of last year’s goals. So, in writing this year’s Bank Marketer Resolution post, I could have simply posted the same resolutions from last year (similar to what I do with some of my personal resolutions). Instead, I reached out to bank industry leaders from across the globe for their ideas. There was surprising uniformity in their suggestions, and a sense of urgency around the need to achieve much more than last year.

So here are the resolutions bank marketers should not ignore in 2012 according to industry leaders:

1. Validate The Value of Marketing Through Measurement: As highlighted in my recent post 100 Years Later, Marketers Still Have Difficulty Measuring Up, there is still a tremendous gap between what bank marketers implement and what is measured. Not only are there almost 20% of marketers who don’t find measurement of results imperative according to recent research by Ifbyphone, but less that 50% of any channel is measured. Dan Marks from First Tennessee says, “Bank marketers should resolve to measure and optimize true marketing ROI – having the courage to seek out the unproductive part of the marketing mix and replace it with other activities that generate real shareholder returns.” Serge Milman, CEO of Optirate states, “In 2012, bank marketers should resolve to have a more diligent focus placed on business drivers that can help manage and grow the bank,” while Bradley Leimer, vice president of online/mobile strategy at Mechanics Bank said that,  “The number one resolution for bank marketers in 2012 must be to ‘put data first,’ since the proof of any program resides in the measurement of results.”

Jeffry Pilcher from The Financial Brand added a common sense resolution that is not always followed . . . “stop doing things that don’t work.” It is clear that if only one resolution can be accomplished in 2012, the measurement of attribution and program results is the most important.
2. Don’t Confuse Channel Economy with Channel Effectiveness: One of my resolutions from last year that needs reinforcement is that bank marketers should leverage the measurement mentioned above to ensure that the right channel (and mix of channels) are used for the right customers. While social and digital media seems less expensive, it doesn’t work as well on its own as it does when mixed with traditional channels. In fact, recent research discussed on this blog has shown that for financial services, many of the traditional channels are more desired and effective than new media. In addition, many bank customers are not reached at all with phone, email or social media programs. As mentioned above, 2012 should be the year of improved measurement and improved attribution analysis, which will help to answer the questions around which channels should be used.

3. Be Customer-Centric: Ron Shevlin, senior analyst from Aite Group and author of the book and blog Snarketing 2.0 stated in a recent post, “banks need to be perceived as doing what’s right for their customers and not just their own bottom line.” One of the banks I work with stated it best when they said that customer centricity means:

    • Know who the customer is and what they want
    • Look out for the customer and help them make the right decisions
    • Reward the customer for their patronage with tangible and intangible benefits

Saying you’re customer-centric is not enough, though. “When claiming your bank is customer-centric, actions speak louder than words,” warned Elizabeth Lumley, special projects editor at Finextra. This was especially evident in 2011, when many large banks made fee changes that created an uproar in social media, resulting in reversals of those decisions. To this new phenomenon, Chris Skinner, author of the Financial Services Club Blog suggested, “Bank marketers should resolve to make 2012 the year where good communication and real transparency ensures that we don’t get screwed by social media campaigns.”

4. Build a Social Media Strategy That Compliments Your Overall Marketing Plan: Instead of engaging in social media because other industries are doing so, it is time to treat social media like other channels, with defined goals, strategies and expected ROI outcomes. “While simply having a Facebook page or Twitter account may have been sufficient in the past, customers are expected to utilize these channels to connect with their bank even more in 2012,” says Karen Licker, financial consultant and social banker (independent) for J.D. Power and Associates. “Given the public nature of these contacts, bank marketers should have a resolution to be aware of these conversations and direct customer outreach, and be equipped to respond quickly to questions or issues raided via these channels.”

Nicole Sturgill, research director for delivery channels at TowerGroup, suggested that bank marketers should resolve to engaging the front line in social media since many don’t realize they are being talked about. Alex Bray, managing consultant at IBM recommended, “Bank marketers should create a clear vision for social media based on a genuine customer value proposition while killing vanity projects that don’t add value.” Added John Owens “In 2012, bankers will need to understand the role and importance of social media to better serve clients and receive feedback.”

5. Leverage Big Data for Better Conversations: There is a lot of discussion in the marketplace about the use of ‘big data’ to transform customer communication and the customer experience. There are very few places where more customer insight is available than in the financial services industry, where we not only have access to demographic and financial service ownership data, but also transactional insight that gives us a view into financial and purchase behaviors. But big data is nothing new, and should not be overwhelming in an environment where the ability to process data has also grown exponentially.

Unfortunately, as was found by Ron Shevlin from Aite Group earlier this year and in a soon to be published report, bank marketers are still not very comfortable with communicating online or through mobile channels using available insights. This may require new talents and new teams according to Brett King, founder of Movenbank, and author of the best-selling book and blog Bank 2.0. “In 2012, bank marketers should have a resolution to build a team that can create compelling customer journeys in real-time,” states King. “Marketing is no longer about ‘pushing’ messages,” continues King. Fred Hagerman, CMO of Firstmark Credit Union adds, “Bank marketers should have a resolution to combine web analytics and database knowledge to drive even more relevant communication.”

6. Build Customer Value From Day 1: While there has been a great deal of discussion around the cost of a checking account since the December 9 American Banker article on the subject, there is no disputing the fact that fees alone can’t make a relationship profitable. As a result, it is imperative that bank marketers look at customers as valuable assets to the bank that need to be nurtured and grown through increased engagement, relationship expansion and retention. As stated by Matthew Wilcox from Zions Bank, “2012 is a year when all bank marketers should resolve to have multichannel new customer onboarding programs as well as highly targeted relationship growth initiatives. To not have these programs in place would leave valuable money on the table and risk losing potentially valuable relationships.”

7. Build Bank Value Daily: The past few years have been difficult for our industry, with the faith and confidence in many leading financial organizations being shaken. In 2012, consumers will look for solid value in products and services with every purchase and decision they make. Those organizations that don’t reinforce the value they provide – every day – will be challenged. Dan Marks said that bank marketers should resolve to “refine, renew, and reinforce the bank’s key brand distinction across the entire enterprise – everyone should know and exhibit how the bank uniquely serves customers’ needs.” Steve Cocheo from the ABA Banking Journal suggested a rather straight forward resolution, “Bank marketers need to accentuate trust and value in the communications they develop and strategies they build.” Bank consultant, Lori Philo-Cook seconded this resolution when she recommended, “Bank marketers should resolve to find new ways to communicate with customers in order to rebuild trust and strengthen relationships.”

8. Innovate: Plain and simple, 2012 is a year where bank marketers should try new things and support innovation done in other areas of the bank. Bryan Clagett, CMO and investor at software services provider Geezeo put it best with his recommended resolution, “Bank marketers should not be afraid to experiment and think outside the box in 2012.” For those organizations where budget, philosophy or other variables may make true innovation challenging, payments pro Scott Loftesness provides a suggestion, “Bank marketers should prepare to be a fast follower, especially in mobile for 2012, unless they have the budget to be an innovator.”

9. Focus on Personal and Professional Development: While the skills needed to do effective bank marketing remain pretty much the same (targeting, messaging, measuring, etc.), the channels available have definitely increased. Therefore, bank marketers can no longer rest on their laurels and hope to succeed in the new marketing environment. More than ever, there needs to be a dedication to becoming familiar with the changes in the marketplace from a product and channel perspective. As stated by bank consultant Jeff Marsico, “The goal for bank marketers is to earn a place at their bank’s strategic planning table and to be more than just an ad budget.” Being aware of the changes in the marketplace can help earn this respect.

For me, I find that following industry leaders on Twitter and subscribing to industry blogs (like mine) are a great way to keep up to speed. Throughout this post, I have provided links to some of the industry pundits who share valuable insights and research on Twitter. Following them will go a long way towards keeping you in the loop. Watching who they follow will further expand your depth and breadth of knowledge. Bob Williams from Harland Clarke put it well in his suggested resolution, “Bank marketers should resolve to listen, discuss, think, read, and write. In short, they should be part of the conversation.” Community banker David Gerbino provided a more basic, yet important resolution that, “Bank marketers need to resolve that they will understand finance, financial reports, and know how to calculate product profitability.”

10. Don’t Be Afraid to Break From The Herd: The banking industry is notorious for having a ‘herd mentality’, following each other’s lead as opposed to thinking independently. In the past, the logic for doing this was usually based around risk aversion. Today, following other bank’s can be both risky and can inhibit value creative. Look at the events around the raising of debit card fees by Bank of America, where many large banks followed the strategy of Bank of America only to have to follow the bank again as they rescinded the fee. The same can be said for the jumping into the social media waters without a defined strategy. While almost all banks are doing something in social media, very few can define the value it is bringing to their bank or what the ROI on this investment is.

2012 should be the year of breakout opportunity for those bank marketers who want to embrace the challenges associated with change. It is definitely not ‘banking as usual’, but is the environment where market leadership is gained and disruption creates new business models and customer segments.

I doubt if any bank marketer will succeed at all of the above resolutions. There may even be better resolutions than the industry experts provided above. If you have one that we missed, let me know. If you think some of the resolutions above are not valid, let me know as well.

I look forward to your comments and to a very exciting 2012.

Leave us a comment below, or Tweet at the author @JimMarous.

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

 

In conjunction with the release of Intuit Financial Services’ 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (The complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not ‘in touch’ with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service.

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, “It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth”. Campbell Edlund from EMI (@EMI_mktg4sales) added, “These findings provide a very strong argument for a communications plan around the customer lifecycle”.
The already robust dialogue really took off as the discussion moved to the acceptance and utilization of banking channels (especially mobile and tablet banking). Bradley Leimer (@leimer) from Mechanics Bank in the San Francisco Bay area believed mobile strategy will be the key to future engagement due to the portability and ‘always on’ nature of the device. He also believed that the correlation between mobile banking and smartphone use (41% of respondents owned a smartphone) could indicate a lower engagement with financial technology in general for non-smartphone users.

Edlund added that while there is currently a higher penetration of smartphones than tablets, tablets can not be ignored by banks since Oracle found that tablet ownership is expected to increase significantly in the next year. She also warned that we need to be cautious not to get ahead of the acceptance curve. . . “we always underestimate inertia”. Brett King (@brettking), author of Bank 2.0 and founder of Movenbank went a step further stating that within 3 years all bank websites will need to be built for tablets first. He also believed that branches will continue to diminish in presence and utility (according to the study, 27% of respondents still visit their branch once a month in addition to ATM visits).

 

Mark Zmarzly (@BankMarketing) did not believe bricks and mortar would completely go away, but definitely felt the relevance of branches will change. “It’s easy to say branches will go away, but is that realistic? They have to evolve, but customers will never let them become 100% irrelevant.” King responded that with the drop in branch transactions, the economics of the branch are not working. I (@jimmarous) illustrated the model of Boeing Employees Credit Union in Seattle, where only 2 of the 40 branch network have tellers, while the installation of multiple ATMs at offices and around the city have an average of 10,000+ transactions each. 94% of the transactions at BECU are done electronically, according to Howie Wu (@howie_wu) from the credit union.

 

“Relevance is the key to banking for tomorrow,” stated King. “By 2015, mobile will be the #1 day-to-day channel, OLB #2 with the branch network being #5. The challenge for mobile and online will be developing great customer journeys”. King doesn’t believe these journeys exist today and believes the goal should be to have banking so pervasive that it is not tied to a branch, device or website, but is everywhere customers are.

Edlund pointed to the retail industry as a forerunner for what we will see in financial services. “Social and tablets will change the landscape in banking as they have in retailing”, Edlund stated. (During the Twitter Town Hall, there was even a discussion of the integration of TV as a channel for banking). Representatives from EMI in Boston (EMI_mktg4banks) emphasized that we will continue to see a blurring of all channels with social media providing some of the glue for enhanced communication. Gamification and location-based rewards were also seen as a key elements of engagement by Leimer and Edlund.

A conundrum was discussed with regard to the needs of small businesses where checks still prevail and the need for branches. King believed that we will see significant attention paid to mobile payments for businesses in the next couple years, while I added that tablet apps for business are also being developed to respond to the needs of the business community. NFC was also seen as a game changer with regard to the need for branches for small businesses. Bob Williams (@bob_williams) from Harland Clarke believed that, while check usage is definitely dropping, there are much greater efficiencies today than in the past with RDC and other electronic tools.

 

It was clear from the Intuit research that was just released, the Bank 2020 research released in April, and the discussion during the Twitter Town Hall today that there is significant disruption in the banking industry with regards to channel support and device utilization. The consumer movement to new banking channels is mirroring the movement to more sophisticated devices such as smartphones and tablets. Many consumers are NOT choosing one device or channel over another, but are using multiple devices depending on their personal needs.

Consumer desire for an integrated banking experience without friction will need to be supported by banking organizations in the future. Distribution networks (whether tangible or intangible) will need to support an expanding array of capabilities that may include integration within retail or social sites as opposed to standing alone.

As I stated to the participants of the Twitter Town Hall at the end of today’s discussion, “If banks are not prepared for the channel migration that is already underway, they may experience the impact of ‘Bank Transfer Decade’”.

Note: A summary of the findings of Intuit Financial Services’ 4th Annual Financial Management Survey and recently released related research is available in my previous Bank Marketing Strategy blog post.

If you weren’t able to join us, what are your thoughts around the impact of channel shift away from the branches and towards other media? Will we see the elimination of branches completely? Will another device or technology unseat smartphones and tablets?

Leave us a comment below, or Tweet at the author @JimMarous.

Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services’ 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don’t visit their bank branch as often as they used to is because they are visiting their FI’s website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year’s BAI Retail Delivery Conference in Chicago. “Banking is quickly changing from a place you go to something you do everyday,” stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

 

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. “The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services,” states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. “Regardless of age, each customer expects to connect to their financial institution in their own way,” said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

“While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future,” said Intuit spokesperson Tobin Lee in a conversation yesterday. “Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer’s needs. If they don’t, someone else will . . . probably displacing a bank’s relationship.”

The desire for ‘anywhere app access’ is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications – Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April’s, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today’s banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

Leave us a comment below, or Tweet at the author @JimMarous.