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PCBB Banc Investment Daily September 16, 2013
Banc Investment Daily
September 16, 2013

The Power of Promotion

Over the past few weeks, we have received in the mail no less than half a dozen calendars, umpteen personalized pads of paper, stacks of address labels, a razor and enough coupons to help fuel a sizeable campfire. Most of the paraphernalia has made its way to the recycling bin, but the purging process got us thinking about the importance of targeted marketing and creating a campaign that generates the results you want.
One thing many banks want today is to increase their mobile banking adoption rates and with good reason. Mobile products and services save money and make customers stickier. Mobile also opens up a new, largely untapped area for potential revenue generation. Statistics from the Fed show that nearly 28% of mobile phone users reported having used mobile banking in the past 12 months vs. 21% in 2011. When you look at smartphone users, mobile banking use is substantially higher at 48% vs. 42% in 2011. As smartphones continue to proliferate, so too should customer demand for mobile banking.
To that end, a handful of banks have launched campaigns this year to encourage more customers to enroll in mobile banking. Wells Fargo's "Done" campaign, for example, plays up the idea that a customer's banking can be done in a jiffy - on a mobile phone, online and on the go. Earlier this year, Capital One began a marketing push to promote its mobile banking app, positioning it as a way customers can quickly and easily manage their money while they go about their everyday activities.
There's something to be said for the idea of flaunting what you've got. Customers aren't mind readers and unless you promote yourself, they may not even be aware of your offerings. In many cases, banks tend to espouse an if-you-build-it-they-will-come mentality, but when it comes to mobile banking, that way of thinking doesn't necessarily win customers. Indeed, a recent Fiserv study found financial institutions that actively marketed mobile banking experienced an average adoption rate that is 2X as high as financial institutions taking a hands-off approach. This means community banks will likely have to work even harder to get the word out, because many smaller banks are still behind the curve when it comes to mobile banking.
To be sure, for banks that have a well-developed mobile banking strategy, there's likely some business to be gained just by doing nothing - simply because the technology is cool and many people want to use it. This isn't a good business practice, however. Retailers understand this and banks must start thinking more along these lines. There's no reason not to think big. Who knows what mobile banking adoption rates could look like when you factor in the power of advertising? Who knows what the revenue impact could be for being proactive vs. reactive?
We already have a good idea what's stopping more customers from signing on to mobile banking. Results of the Fed study pinpoint two main reasons. The first relates to customer concerns about the security of the technology. The second is the perception that mobile banking doesn't offer any tangible benefits compared with existing banking and payment methods.
As we all know, perceptions can be changed through effective advertising. While sending out gobs of recyclable material isn't necessarily the answer, a sound, targeted campaign could be.