By Jim Edrington
ABA’s chief member engagement officer Jim Edrington weighs in on what bank marketers should prepare for in the year to come.
Banks are evolving. They’ve been evolving all along, albeit at an uneven pace. If you’ve felt like your bank marketing has been stuck in some way, you’re probably not alone. But keep your eye on the horizon. 2018 is shaping up to be a good year to get unstuck.
A two-pronged catalyst for change is coming out of Washington, and—political opinions aside—your bank is already starting to feel the impact.
- Tax Reform – With the passage of the tax reform bill at the end of 2017, banks are girding for change. Previously, banks paid one of the highest effective tax rates of any industry. So this new reduction in business tax rates will be transformative. Just days into the new year, nearly two dozen banks have responded optimistically by announcing new employee bonuses, raises in their minimum wage, and/or substantial donations to their foundations or charitable funds. On the other hand, banks have also expressed caution about how the new law will affect loan demand and collateral values. We’ll be watching closely to see how it shakes out.
- Regulatory Reform – Rulemaking slowed down in 2017, and while compliance remains a top risk, there’s a growing optimism that we may be seeing the light at the end of the long, dark compliance tunnel. While no one wants to lay odds on what will or won’t happen in Washington, momentum for regulatory reform has been building. If it goes through, banks will finally be able to focus more energy on the customer side instead of the regulatory side.
In the meantime, marketing departments continue to rise in prominence within banking organizations (we’ll be talking more about that shortly). As a marketer, you’ll be expected to know how to parlay these new developments into better ways of reaching customers.
Where to start?
Marketing has an important role to play in helping banks figure out how to use social media, business intelligence, artificial intelligence, and biometrics—among other things—in ways that will reshape the industry.
Technology is playing an increased role in customer touch. There are so many digital channels now that are challenging the traditional ways of attracting business. At the recent ABA Bank Marketing Conference, Mathew Sweezy from Salesforce talked about ways to take advantage of certain moments, like when a consumer:
- Lands on your site
- Gets frustrated
- Gets bored
Sweezy refers to social media as “the modern day smoke break,” i.e., an escape from boredom. That certainly rings true for many of us. Is your bank there, ready to engage with meaningful content at these moments?
If you haven’t yet, it’s time to face the inevitable.
On a related note, banks are going to have to get on the fintech train before it leaves the station—or get left behind.
That’s right, you heard it here—fintech will continue to be a big topic in 2018. It’s not one of those things that will go away if you ignore it long enough. Bankers and customers alike will always be looking for ways to do things faster, more efficiently, and more effectively. And fintech fills that need.
There’s no denying there’s a lot happening at the fintech firms. For most banks, though, the question is, what’s the role of the core processors going to be? A lot of banks have their hands tied with their core processors, and it’s not yet clear how the cores can adapt as quickly as they need to. The small fintechs are so nimble. You can expect increased pressure on the cores to react accordingly. It’s only a matter of time before we’ll see great alternatives becoming available.
Still working on how to attract and serve that new generation of customer?
Keep looking forward. In 2017, the first wave of Gen Z graduated from college and entered the workforce. Demographic sectors don’t stand still, and neither do their needs. Not only will you have to consider how to position your bank as a preferable alternative to the fintechs—you’ll also need to position banking as a viable career to a population that might not understand why banks are necessary.
How to get their attention? We’ve looked at that question from a variety of angles. It comes down to culture, a sense of purpose, and opportunities for development.
And if you haven’t gotten the memo yet, be aware: Helping young employees pay down student debt is a more meaningful benefit than ping-pong tables at work or free beer. American Banker recently looked at student loan repayment benefits as an effective recruiting tool for luring entry-level tech talent into banking. ABA’s endorsed solution in this field—Gradifi—was acquired by San Francisco’s First Republic Bank over a year ago, after First Republic saw how successful the program was with the bank’s own employees.
The call to action is this.
The world is shifting. Banks need to recognize that and move accordingly. When it comes to innovation, banks fit pretty neatly into a standard bell curve: There are the early adopters, there’s the bulk of them who are following along, and then you’ve got the laggards. This is an area where you really don’t want to be the laggard.
That said, there’s never been a better time to bring in new talent, to pitch banking as a career to prospective employees, and to identify better ways to engage with customers.
Because in the end, it’s all about engaging with customers. Find out what they need. Identify ways to serve them better. Tell your story. Those are the things that have not changed. As bankers, marketers, and bank customers, we all share the same concerns. We’re looking for the same answers.