CUNA Marketing and Business Development Council
In the world of retail financial services, there’s a titanic struggle going on for consumers’ loyaltyand their deposits. In the past few months, we’ve seen the fall of the TitansWall Street investment banks, according to Fiserve Senior Vice President Mark Sievewright, writing in Credit Union Magazine. Challenged by smaller and often more nimble competitors, the Titans may be down, but they’re not out.
Credit unions now have additional competitors for deposits and relationships with members and potential members, notes Sievewright. They intend to grow their deposit bases with a heavy retail focus. In essence, they’ve just changed addresses, from Wall Street to Main Street.
Amid this raging industry convergence, one action credit unions can take is to develop an intense focus on winning and deepening member relationships. This focus depends on service quality and on marketing the credit union advantages. At the same time, however, many banks are scaling up their advertising budgets.
Industry-wide caution about expense levels has intensified this year, and few areas have been spared the knife. But for some bankers who see an opportunity to gain market share, spending on marketing is not merely being maintainedit’s growing.
Banks such as PNC Financial Services Group and U.S. Bancorp ramped up promotions late last year, with marketing budgets growing approximately 5.5% from a year earlier. Average deposits and new accounts also rose significantly, reports American Banker, with much of the gain attributed to promotional activity.
Bank of America boosted its third-quarter ad and marketing budget 9.6% from a year earlier, to $605 million. Some of that was invested in ads to welcome new customers following recent acquisitions. The company’s updated campaign bills itself as a safe place to ride out the financial crisis.
Given that ad spending overall is down, observers say a commitment to advertising sends a strong message.
“Many banks are repositioning their ads around safety and soundness, and those that are profitable and with strong capital positions are advertising noticeably more than others,” said Les Dinkin, a managing director in the New York consulting firm Novantas. “The strong banks clearly have a very unique opportunity right now to gain market share.”“We have increased our advertising at the height of a recession to opportunistically attract prospects,” says one PNC executive. “We emphasize that we’re playing from a position of strength.”
Observers expect other large companies that have closed major acquisitions to bolster marketing budgets early this year to promote themselves to newly acquired customers. That list includes Wells Fargo, which picked up Wachovia; PNC, new owner of National City ; and JPMorgan Chase, which bought Washington Mutual’s banking operations.
“The bigger players need to keep those customers,” said Charles Wendel, founder and president of Financial Institutions Consulting. “But you’ll see community banks and smaller regional banks trying to sneak in and take them away.”