Not Banking on Banks

2. Not Banking on Banks • The $684-billion commercial banking industry is an essential component of everyday life; however, its role in the financial crisis that led to the recession has resulted in just 28% of Americans having a great deal of confidence in banks, as of June 2015. • According to the June Gallup poll, Americans with a great deal of confidence in banks tumbled from 53% during 2004 to 22% for June 2009, and hadn’t recovered at all during June 2012, when the results were 21%. • February 2015 survey data from Pew Research Center revealed that 45% of Americans polled thought government policies since the recession had benefited large banks a great deal, compared to 5% for middle class people.

3. Money Masters • Despite all the government financial regulations since the recession, 44% of the total assets of all banks, as of September 30, 2014, were concentrated in just five banks: JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and US Bancorp. • Consumers tend to favor these mega-banks, as indicated by 2015 Gallup data that shows the average national bank customer has 71% of their total financial products with their primary bank, compared to 66% for a regional bank customer. • The unfavorable market position of small regional and community banks is even more apparent when it comes to customers’ credit products, as national banks hold 53% of their customers’ while the smaller banks hold just 32% of theirs.

4. Customer Satisfaction Slides • Although only 28% of consumers have a great deal of confidence in banks, 86% trust their bank to manage their personal data securely, compared to mobile phone network providers, online retailers and others who store personal data. • Despite this level of trust, 79% of participants in the Accenture 2015 North America Consumer Digital Banking Survey said their relationship with their bank was simply transactional, or just checking, savings, etc., and not advisory. • The American Customer Satisfaction Index for banks decreased from 78 for 2013 to 76 for 2014. Among the top four banks, JPMorgan Chase’s index decreased 3% while Citigroup, Well Fargo and Bank of America remained unchanged from 2013.

5. Broken Branches • 1995 to 2008, the number of branches in the US increased 22.9%, although the number of transactions decreased 45% since 1992 and 15% from 2011 through 2014. Branches decreased almost 5% per year from 2009 through 2014. • Although a June 2015 study showed that 56% of consumers visited a bank branch once per month or less, 64% said a nearby branch was important or very important and a convenient location was the #1 reason they picked their current bank. • Of customers surveyed, 60% did not anticipate increasing their branch visits or use, 25% said they would use their bank’s branch even less and only 15% said their number of branch visits would increase during the future.

6. Your Bank in Your Pocket • According to the Bank of America 2015 Trends in Consumer Mobility Report, 57% of survey respondents said they had tried a mobile banking app and of those that use an app, 62% do so at least a few times per week or more often. • J.D. Power reported that customer satisfaction with mobile banking actually decreased during 2015, compared to 2014, primarily because banks have been slow to develop apps with the sophisticated technology that consumers expect. • Because US Latinos are more smartphone-dependent, 37% are more likely to use their mobile banking app when accessing their account balance or conducting transactions, compared to 23% for the total population.

7. Dedicating More Ad Dollars to Digital • According to research from eMarketer, US financial institutions are projected to spend $7.19 billion on digital marketing during 2015, a 14.5% increase over 2014, and total spending will continue to increase by double digits through 2019, to $10.9 billion. • Search advertising will account for the largest share (47.3%) of the $7.19 billion, or $3.40 billion, with $3.02 billion of that total dedicated to paid-digital display. Video channel spending will be approximately $755 million. • Of the total digital ad spending, $3.49 billion will be earmarked solely for mobile, or 48.5%, with the remaining 51.5% allocated for desktop. In another study, social media is forecast to receive an 8.8% share, compared to 5.9% for 2014.

8. Advertising Strategies • For regional and community banks to remain competitive, they need the branding power of TV. Their message should emphasize their local knowledge and more personalized customer service and promote a free household financial seminar at the bank during weekends. • Regional and community banks can even outcompete the national banks if the smaller banks are the first to develop the more technologically advanced mobile banking app consumers want, and then use TV to promote this advantage. • As much as banks should target Millennials to develop long-term relationships, Baby Boomers hold much more wealth than Millennials. Since TV is the best medium to reach seniors, banks should air commercials that promote senior-specific services.

9. Social Media Strategies • Ask Millennials to submit videos of themselves explaining why they started saving money and the benefits for them, and then ask social media users to vote on the best reason, with an appropriate prize for the winner. • Another competitive opportunity for regional and community banks is to produce a series of informative videos, one for each of their consumer products, since people are more likely to engage with companies that post videos that explain products and don’t pitch them. • To promote a bank’s advisory role as being more beneficial to consumers than just a transactional role, appropriate bank personnel can voice podcasts that explain how the bank can serve consumers more comprehensively and improve their financial situation.