Marketers are being called upon like never before to assist business lines in achieving their sales objectives.
By Mark Gibson
Bank marketers thought they could catch their breath once the pandemic settled down.
They were wrong! Accelerating consumer behavior changes, rapidly expanding digital marketing capabilities and regulatory shifts are combining to make 2023 even more interesting and demanding than the past several years. Let’s take a look at four critical trends that will have a major impact:
Bye-bye cookies
The industry has been talking about a cookie-less future for the last few years. But with Apple’s recent changes and Google’s announced changes to its Chrome browser, the future is arriving now. This will have a major impact on how most bank marketers do digital advertising, and needs to be addressed in order to maintain marketing performance.
Put simply, third-party data that allows marketers to track consumer behavior on the web and target them based on interest will become much more difficult. Alternative approaches such as building and using ‘first party data’—or data customers generate by doing business with the bank—become essential. For instance, having a database of each customer’s email address and phone number, as well as being able to monitor customer behavior on your website, will allow the bank marketer to tailor messages to provide advice, present a customized offer or sell a product.
The obvious implication is that data gathering, data management and highly-focused data analytics become much more critical in this new world. A secondary implication is that marketing automation is needed to do something with that data—target personalized offers as well as customize campaigns to customers who are exhibiting specific behaviors. All while operating in a new cookie-less environment.
The battle for deposits
Who would have thought six months ago that we would be seeing deposit rate wars being fought in our markets? But here we are as pandemic stimulus deposits flow out of the bank, and lending demand continues. Also contributing to the deposit outflow is the aggressive approach that many banks and neobanks are taking to raise deposits. In fact, a recent JD Power survey reports that 26 percent of customers moved money to another institution in the past 30 days. That is a lot of movement.
What that statistic suggests is that stopping the outflow is probably banks’ most urgent task. How can you support front-line bankers? Useful options can range from providing lists of large depositors to creating promotional products and/or offers that bankers can provide to rate-sensitive customers. This will continue to be a priority throughout 2023.
In addition, many marketers have dusted off their CD growth campaign playbook. Even rate ads in print newspapers have returned to our repertoire. However, bank marketers will need to get savvier than having the highest CD rate in town. Many will use data analytics to identify prospects in their markets that are likely to have large deposits at other banks, and make targeted offers to them.
These types of deposit growth programs can feature CDs but they can also highlight high-yield savings or money market products that are designed to attract new money. These can be preferable to CD campaigns, both because they generate core deposit dollars, but also because they have a better chance of creating a core customer for the bank.
Driving sales to the digital channel
One of the biggest behavioral implications of the pandemic is that it taught millions of people to use technology instead of traveling to meet face-to-face. While some banks had already invested in sophisticated online account opening systems with great UX, many banks struggled to make up for the reduction in branch sales. As a result, investing in improved digital account opening systems is on most banks’ current technology roadmaps. However, what they often find is that implementing these systems is not like the movie “Field of Dreams.” In other words, when you build it, customers and prospects won’t necessarily come.
What are needed are new marketing programs designed to drive people to the new online application. While you can incorporate the URL into your existing customer acquisition campaigns, what is usually also needed is a dedicated campaign designed specifically to attract digitally oriented customers to your website and application. This will be a top priority for most marketers in 2023.
This priority will necessitate two things. First, marketing will need to work very closely with the digital channel to coordinate the campaigns and then manage the marketing and application conversion funnel on a daily and weekly basis. Second, an ongoing process will be essential to measure results on that same frequent time frame, so that both marketing and sales activities can be tested and optimized as the campaign unfolds. Some of our clients find that media performance and sales results can be increased by least 25 percent by the tenth week of a campaign by using this frequent optimization process.
Keeping up with the regulators
Two very critical changes are emerging in the regulatory and compliance space. The first is how to realize all the benefits digital marketing provides while managing significant and increasing compliance risk. The second is upcoming changes to data privacy laws and how they will impact the marketing landscape in 2023.
Regulators have become more active in examining how a bank targets its advertising, and how digital algorithms may be excluding certain protected classes of consumers, often without the bank’s knowledge. In addition, regulators have said they may begin applying fair lending-type reviews to other categories such as consumer deposits and even business advertising. Compliance teams must take all of this into account, and it can have a big impact on marketing’s advertising effectiveness. Also: Digital marketers that provide targeted advertising for financial firms are now even subject to the Consumer Financial Protection Act and its prohibition on UDAAP, due to an interpretive rule issued by the CFPB this summer.
Finding common ground between compliance and marketing will be essential in 2023 in order to manage risk and simultaneously achieve the banks’ business objectives. Campaigns, products and marketing techniques need to be ‘risk-rated,’ and appropriate documentation on reviews, approvals and mitigating factors must be completed consistently. This will allow more intensive review to be focused on campaigns with high-risk components, while a streamlined approval process is designed for the rest.
The patchwork quilt of data privacy laws may soon be blanketed by the American Data Privacy and Protection Act, but whether that happens bank marketers will need to up their game this year. Already, five states have passed laws restricting how companies can collect and use customer information. California’s law has similarities with Europe’s GDPR and many experts believe it’s only a matter of time before the U.S adopts something similar as well.
Implications for bank marketers in 2023 include:
• The development of new skill sets, processes, and organizational approaches to ensure the proper balance between regulatory risk management and advertising effectiveness—probably involving enhanced training for marketers and their vendors
• Review of the campaign development process to make sure compliance is involved in the targeting and media as well as the creative asset review, and that measurement and documentation is sufficient
• More rigorous examination and management of vendors, data providers, and media platforms to identify potential compliance-related risk
• Closer working relationships between marketing and compliance staff to ensure coordination not confrontation.
Marketers are being called upon like never before to assist business lines in achieving their sales objectives. At the same time, evolving technologies and shifting regulations are constantly creating new enablers and barriers to success. While the past several years have stretched marketing’s ability to innovate and adapt, the new year promises to be just as challenging—and rewarding.
Mark Gibson is senior consultant at Capital Performance Group, a strategic consulting firm that assists banks with strategic planning and marketing performance. He can also be reached on LinkedIn.
