The community bank space is consolidating at a blistering pace, but buyers may be overlooking a key consideration when thinking about mergers and acquisitions. Prospective buyers should consider how other footprints complement growth opportunities against their own, lest they make critical and expensive mistakes. In this video, Kamal Mustafa, chairman of the Invictus Group, explains why bank buyers should assess a target’s footprint, and how to value the industries and lending opportunities within a new market.
Banks looking to reach a niche or younger demographic may want to consider partnering with a trusted voice: an influencer.
Capitalizing on the ubiquity of social media, influencer marketing is a way for brands to target groups of younger consumers through a partnership. The size of the influencer industry is expected to grow to $16.4 billion globally in 2022, up from $1.7 billion in 2016, according to a 2022 benchmark report from Influencer Marketing Hub. The explosion of influencers means banks have a variety of potential marketing partners that share their values, needs or concerns — at price points that community banks could afford.
“Engaging influencers, particularly local ones, is a great way to lend their authenticity and local followers to your brand,” writes Flynn Zaiger, CEO of marketing firm Online Optimism, in an email.
Influencers are individuals who affect another’s purchasing decisions, due to their “authority, knowledge, position, or relationship” with their audience, according to the website Influencer Marketing Hub. Influencers have a distinct, often niche, audience, with which they actively cultivate and engage.
Influencer partnerships are an alternative marketing approach that banks can use to highlight specific products or services for targeted audiences: a local business owner could talk about loans or business accounts, or a family blogger can discuss college savings accounts. Some big banks, including Wells Fargo & Co., JPMorgan Chase & Co., American Express Co. and U.S. Bancorp, have partnered with influencers for specific campaigns like charitable food drives, credit cards and savings accounts. But the range of influencers has expanded beyond celebrities and athletes to individuals sharing their lifestyle, creations or cultivating profiles for their pets, giving banks a variety of personalities — and price points — to choose from.
Source: Influencer content on Instagram, sponsored by JPMorgan Chase & Co. and American Express Co.
Influencer partnerships, with Youtubers like MrBeast, have long been part of the business strategy at mobile banking fintech Current. Adam Hadi, vice president of marketing, says using influencers fits in the company’s understanding of its millennial and Generation Z audience. Current is careful to identify influencers that align with the company’s values.
“If you don’t know where [your audience’s] attention is, you’re never going to reach them,” he says. “If you don’t know what they care about, you won’t be able to be impactful with your message.”
Influencer marketing is a relationship between a brand and the content creator, and requires a lot of trust on both ends, he says. Managing influencer relationships takes a number of analytical, creative and business development skills; like all marketing campaigns, it can be tough to strike the balance between commercial appeal and authentic connection. Additionally, influencing partnerships can involve more upfront research and ongoing maintenance and monitoring than running Google Ads or other forms of online advertising, Zaiger writes.
Social Media User Demographics:
Instagram: More than 75% of the photo sharing app’s users are between 18 and 34 years old; 43% of the app’s users are women between those age ranges.
TikTok: 46% of the video platform’s users are girls and women aged 13 to 24.
YouTube: Male millennials make up a fifth of all YouTube viewers — double their female counterparts. Source: Influencer Marketing Hub 2022 benchmark report.
“Influencer campaigns are an interesting option for community banks that are looking for more impact from their digital campaigns, but might not have previously invested in growing their social media audiences,” Zaiger writes.
Before launching an influencer campaign, community bank executives should think about their community — both in the geographic sense but also the identities and affiliations of their current and prospective customers. The bank should have a strong sense of its values and strategic goals and find influencers who speak to both the customer communities and are aligned with the bank.
Once they’ve identified potential influencers, executives will need to conduct due diligence on the individual to address any potential reputational risks. They should also discuss related compliance concerns or other advertising laws that may apply to the agreement. Like all marketing endeavors, executives should set the goals and objectives of an influencer partnership, as well as how they will measure success. Common metrics include views, engagement or conversion metrics like new accounts opened through a referral link or growth in deposits.
The ubiquity of social media means influencer marketing is likely to grow, as more brands try to connect with customers through their devices. Influencer marketing is one way banks can evolve their image, and place in the community, to reach today’s mobile-first consumers.
Despite continuous setbacks, women are more economically powerful in America than ever before. This is a prime opportunity for banks to capitalize on women’s unique banking demands, both as customers and in terms of employment.
Women were disproportionately impacted by the coronavirus pandemic, causing a further growth in gender financial disparities. Unemployment among women increased compared to men, according to a study by the UN Capital Development Fund; additionally, millions of women left the workforce to prioritize caregiving responsibilities.
The pandemic comes in the midst of what is expected to be the greatest wealth transfer in history that is expected to occur in the next decade. More than $30 trillion of wealth could be passed from baby boomers to their children and heirs. Women’s share of private wealth is expected to grow dramatically.
Additionally, women own and operate two-fifths of small to mid-sized businesses — yet 70% of them still have unserved or underserved credit needs, according to a recent IDB Group study. And more than two-thirds of female entrepreneurs are opening businesses because they see clear business opportunities, not just out of necessity.
The economic tables are turning. Women are now the primary breadwinners in the United States and now earn the lion’s share of household income overall compared to any other banking demographic. Nearly two-thirds of mothers last year were either breadwinners or for their families. More that 40% of women are working mothers whose income makes up at least half of their family’s total income.
For women in America, one size does not fit all. Financial inclusion — which extends far beyond a bank account — leads to economic empowerment. But “bank accounts can be powerful tools in the hands of women who are determined to take more control over their lives,” says Greta Bull, former CEO of the Consultative Group to Assist the Poor. So, let’s start there.
How Banks Can Capitalize How well do the current banking conditions look, given that women control of more dollars than ever before? As the new default users of financial products and services, women are making spending decisions — lots of them.
It’s not enough for banks to use targeted marketing that features bright-colored content and fancy font types. Those and other stereotypically feminine marketing strategies are never going to work, especially when it comes to banking.
The problem isn’t that women aren’t being exposed to attempts from banks to acquire new customers. From my personal experience navigating the banking industry as a female customer, I can say it’s actually very much the opposite. I am constantly bombarded by the same cookie-cutter attempts to draw my attention to the same untailored banking products or services over and over again.
The problem is that banks aren’t offering anything that meets the needs and preferences of the female demographic. They need to systematically rethink their banking practices and how they address the users of their banking services.
It’s estimated that more than 3 million women are seeking restart opportunities. Several consultancies focused on restarts — such as Après, iRelaunch, and reacHIRE — have launched in the last few years. These companies, and others, help financial institutions and other organizations develop restart channels within their inclusion programs and help identify candidates. Banks are also launching financial products and services tailored to the specific needs of women entrepreneurs, as they increase the quality of their portfolio while having a social impact.
“What [these banks] offer ranges from women-targeted loans for working capital and investments to credit cards, housing loans, programmed savings, checking accounts and insurance products. This offering is further complemented by non-financial services including networking events for women entrepreneurs and training programs,” the IDB Invest wrote in a piece about how banks can attract more female customers. “Given women’s comparatively better savings behavior, demonstrated loyalty to banks and lower credit risk, many banks aspire to be the financial institution of choice for women in the region.”
These banks are on the right track. Women won’t enjoy doing business with any financial institution that considers men their default user. It is time to change the dynamic between women and banks. It is urgent that banks act on this as soon as possible if they desire the greatest return from investing in diversity and inclusion programs. They need to embed actionable plans that create more financial inclusion for women as part of their long-term business strategies.
A ‘Call to Action’ mindset will drive diversity within firms to showcase more tech innovations and increase productivity. The more that women work, the more economies grow. Simply put, women’s economic equality is not only right — it’s good for business.
Are you using the data you have to understand and target your marketplace and each customer need? The truth is that most banks today generate more data than they are capable of exploiting.
But does the instant availability of data, combined with less expensive and faster computing capability, make big data a competitive silver bullet or is it just the next shiny object that will distract us from the real business at hand? Bottom line… is more data actually better?
Being saddled with legacy siloed technology platforms, lacking analytical expertise and structured only to support traditional approaches to data usage, many financial institutions are finding they’re woefully unprepared for the challenges of working with big data (usually defined as data inside and outside the organization that is both structured and unstructured).
A better starting place for most banks is to start small, using a building-block approach to data management. This would address the most immediate hurdles facing banks today including: 1) improving the integrity of current data, 2) integrating multiple data silos, 3) leveraging real-time data, 4) improving accessibility of data, and 5) better analyzing data sets.
Improving Data Integrity Before we expand our data inputs, we must make sure our existing database is complete and accurate. While names and addresses may be up to date, the same can’t usually be said for phone numbers, email addresses and preferred communication channels. >In addition, important information such as mobile phone numbers and services held at other institutions is usually not collected.
To move forward in the world of big data, we should first build a plan to update and backfill outdated and incomplete data files. This process starts on the front line, in our call centers and through customer surveys.
Integrating Data Silos Most banks still have individual data silos for the retail consumer, small businesses, commercial accounts, the mortgage portfolio and possibly other credit services such as credit cards. Without an integrated platform, a fully functioning 360-degree view of our customers is impossible.
A common scenario occurs when banks don’t recognize small business or commercial relationships of retail customers. Breaking down silos between product lines and integrating the data should be done before any overarching big data initiative is considered.
Leveraging Real-Time Data As more customers are using online and mobile channels, there is a need to leverage real-time data from both the bank and customer perspective. Yesterday’s data, while important for trend analysis, is much less valuable for risk analysis and marketing optimization.
Today’s customer expects all transactions to be reflected immediately as they use their cards, transfer funds online, and increasingly use their mobile devices to transact. Other industries have also made them accustomed to relevant offers, communicated using the right channel at the optimal time. To accomplish this in banking, we need to collect (and act on) real-time data.
Expanding Data Accessibility Integrating accurate and complete real-time data is powerful only if it can be easily accessed and effectively analyzed across the organization. This will require a new operating model and approach to data management.
Since many banks are already dealing with data overload, the odds are not in our favor that more data will automatically improve results. But until all areas are seeing the same view of the customer, and can make business decisions based on insight available, the potential of big data will be lost.
Analyzing Data Remember, more data doesn’t fix bad analysis. Progressive banks in the future will be engaging with customers in ways that were unforeseen only a few years ago. Retail banking will be operating faster as described in a recent blog post written by Scott Bales from Movenbank entitled, “Finding Serendipity in Big Data.”
Competitive advantage is achievable through the better analysis and use of customer data and big data definitely deserves to be part of our planning and strategy process. But banks should start small as opposed to boiling an ocean. Some starting steps include:
Use account level and transaction data to build life-stage trigger communication programs (new movers, retention, onboarding)
Leverage transaction data to improve risk and fraud monitoring
Review channel and transaction data to determine optimal branch reconfiguration (size, structure, support)
Use funds movement data to determine price elasticity of products and customer segments
Now is the time to improve the accuracy of data already stored, build real-time capabilities, break down existing data solos and improve the accessibility and analysis of data to ensure that the concept of big data doesn’t move towards the trough of disillusionment and lost opportunities.
Are you using the data you have to understand and target your marketplace and each customer need? The truth is that most banks today generate more data than they are capable of exploiting.