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When taken together, the posts in our What Customers Want series thus far point to opportunities for banks to innovate around the good old George Bailey banking model.
January 29 -
We recently grilled mobile app designer Greg Nudelman on what banks should be doing differently with their mobile banking apps.
January 21
Community banks are threatened on many fronts burdensome regulations, national competition, inefficient branch networks and technology breaches. None of these threats, however, is more serious and least anticipated than that of mobile banking. The service, which smaller banks struggle to embrace, may be the very one gobbling up market share.
Fifty one percent of U.S. adults and 61% of internet users
Although mobile banking is a financial and technological challenge for most banks, community banks have their backs to the wall. They cannot match the huge budgets, seamless convenience or slick features offered by national banks.
According to
Spread these costs over big branch networks and hundreds of thousands of customers and huge investments make sense. The
But small-bank economics makes similar technology prohibitively expensive. As a result, most community banks rely on private-label firms to provide generic versions of mobile services. However, without the latest features and customized applications, small institutions struggle to keep up.
Later this year, Wells Fargo is rolling out a mobile banking app incorporating voice technology, an advance many experts expect will be next big thing. But it will be years before voice technology shows up in small-bank apps.
Theres more than economics that motivates big banks. They have discovered that mobile is their best bet for combating deep consumer distrust and rampant turnover. The banking industry largely reflective of customers perception of big banks ranks dead last of eight industry categories in a 2014
They see the labor-intensive process of setting up online bill payments and automatic deposits as an advantage because it creates barriers to switching banks. According to a 2012 Javelin Strategy & Research survey, the
In 2013, JPMorgan Chase reported
What strategies should community banks adopt to compete with big institutions? Here's a seven-point plan.
- Don't seek technology parity with big banks; its unattainable. Stake out the middle ground. Most customers are not early adopters and don't seek cutting-edge features. Apple may be the innovation leader, but Samsung has
double the market share . - Pursue your niche. Target customers that want personal service, objective information, integrity and a neighborhood commitment. Identifying high-potential prospects, cross-marketing and strengthening community ties have never been more important.
- Personalize your bank. Use the faces of local employees in advertising, brochures and websites to underscore that one-on-one banking relationships are your specialty. Use customer endorsements, too. Social media is an ideal way to strengthen relationships, answer financial questions, highlight employees and promote community events.
- Launch a hyperlocal marketing plan. Partner with community groups, support local events, underwrite school activities and promote a local business environment. Look for opportunities that are impractical for national brands. Bring the community into your lobby, that is, hold free concerts, chamber of commerce receptions, school registrations and financial seminars.
- Make it easy for big-bank customers to switch institutions. Nearly
20% of large-bank customers consider leaving each year. Make it easy for them. Promote a low-cost checking or debit account to allow big-bank customers to test out your institution. Develop an easy-to-use Switch Kit and advertise a Say Goodbye to Your Bank program that encourages disgruntled big-bank customers to leave. - Compare your fees against those of big-bank competitors your fees will probably be lower. According to a
2013 American Bankers Association survey roughly two-thirds of people think they pay next to nothing for their checking account. However, aMoneyRates.com survey found only around 30% of accounts are actually free. Compare your fees to large-bank competitors and highlight the differences. - Conduct two or three focus groups with noncustomers. Find out why they dont use your bank and which competitors have irritating policies or services. Develop a marketing plan to respond to criticisms and leverage anti-bank sentiment.
Mobile banking plays a different role for big banks than smaller ones. Community institutions would do well to recognize the importance of mobile banking, but continue to focus on delivering the services that has fueled their growth for the last hundred or so years.
Kevin Tynan is senior vice president for Marketing at Liberty Bank for Savings, an $850 million-asset mutual savings bank in Chicago. He can be reached at