1 Flashcards
Delivery channels
branch online banking website mobile desktop email sms direct mail paper radio phone
product insights
checking savings loans mobile banking user insurance or investments high or low balances debit or credit card user
demographic insights
age sex geography marital status employed\income homeowner
3D advertising approach
be unique
have value
be seen
place distribution stop
is mainly concerned with making the product available at the desired time and place
2 important elements of distribution strategy for bank
location & ease of access
inbound link
is a hyperlink back to your site from another website
ex. schools, chambers, social media channels
digital marketing
the act of understanding, reaching and engaging with your audience online . often through social media
competitive profile
banks marketing decisions must take into account -
competitors marketing strategies (product offering, pricing, hours, delivery channels &. services) and their likely reactions to the banks own marketing activities
market place profile
provides management with the info it needs to identify potential challenges and opportunities in both retail and business markets defines trade area population data housing trends new business developments demographic info in geography areas
market research
in a investigation of what had been defines as the market
in short its the acquisition and use of information that can be beneficial to the marketing management process. Its the transformation of info, turning raw data into compelling about bank’s customer, market and competition
marketing concept
an approach to business that makes marketing a central element of the business; a methodology that enables all of an organizations divisions to focus their efforts on activities that satisfy customers needs by providing them with products and services they want and that earn appropriate margins for the company and its shareholders
closed end credit
credit for a special purpose and for a fixed amount that is established at the beginning of the transaction, to be repaid in on or more regular payments over a set time
AIDAS formula
5 successive stages of consumer responsiveness in the selling process
A - Attention - gain prospects attention
I- Interest arouse interest
D- Desire stimulate desire for a product
A- Action get buying action
S - Satisfaction build satisfaction into the transaction
over simplistic because the sales person can control the behavior of the prospective buyer is the process is managed skillfully
bank’s internal publics
bank has some control over the reception other its communications to them
example of internal publics:
employees, directors, customers and shareholders
bank’s external publics
bank does not have control over the message and when it will be received
external publics: investment community, the community served by the bank, consumer groups, community action groups, organizations receiving corporate contributions, govt officials a
4 elements that media and consumers expect from a bank dealing with a crisis
- describe the risk accurately
- describe the actions the bank will take to mitigate the risk
- identify the cause of the risk
- demonstrate responsible management actoion
investor relations
involves communicating wit the banks shareholders, potential shareholders and those who have the ability to affect the activity in, and price of, the bank’s stock
4 basic elements of effective advertising
headline
illustration
copy
signature
search ads
pull approach
see your ads because they were already looking for your bank’s products or services
display ads
push approach
people usually see display ads because they were targeted while reading a piece of content, watching a video, checking email, or browsing web
quality score
google ad words
quality score is an estimate of your ads, keywords and landing page. Made up of expected CTR, ad relevance & landing page experience
1-10 10 is highes
ad extensions
a way to expand your ad with additional info, giving people more reasons to choose your business
ie, call buttons, location info, links to specific pares of your website
negative match
exclude negative key words
ie -bad credit
broad match modifier
only shows words designated with a + sign
ie +bank accounts
broad match
is the default match type that all your key words are designed. Ads may show on searches that include misspellings, synonyms, related searches, and other relevant variations
keywords
are words or phrases describing your product or service that you choose to help determine your product or service when and where you ad can appear
ad group
contains one or more ads which target a shared set of key words. You set a bid or price to be used when ad group’s keywords trigger an additional ad to appear. Also called CPC bid, You can also set prices for individual key words within an ad group
sample
a small number of individuals scientifically selected from the general population, whose opinions, preferences, and characteristics are representative of the group as a whole
sales promotion
any device (other than advertising, public relations, and personal selling) that provide an incentive to the customer to purchase goods or services. For example: cents off coupons, premiums, in store displays
service
an intangible activity or benefit performed by a business that satisfies a consumer need. In banking this term is often used interchangeably with a product
skimming price
setting a high initial price for a product to attract the “cream” of the market. Consumers who will buy regardless of the price
source of funds
an activity that generates deposits of lendable money
deposits
fed funds
liability on balance sheet
premium
cash or merchandise that a business gives away or sells at a discount as and incentive to purchase a product
penetration pricing
setting a low initial price in order to attract a large market share quickly
open end credit
a specified amount of credit available for use at the customers discretion; repayment ranges from interest only through minimum state amounts to a percentage specified in the contract
foundation of situation analysis
3 basic profiles:
customer profile
market place profile
competitive profile
product
a product is anything that can be offered to the market for attention (public relations acquisition, use, or consumption that might satisfy a want or a need.
Kolter
Is a key element in the marketing mix for two reasons:
1 The product is the firms reason for being
2 All other elements of the marketing mix revolve around the product
From a marketing point of view a product has 5 different aspects 1 the core product (benefit) 2 the generic product 3 the expected product 4 the augmented product 5 the potential product
captive financing
financing offered by the manufacturer & related entities directly through the dealer
7 Cs of today’s market place
connectedness conversations community collaboration convenience confirmation conversion
rates
what you pay for deposits impacts loan pricing answers effects margins
FHLB borrowings also has effect on margins
current rates
LIBOR - London Inter-Bank Offered Rate- interest rate average used to determine bank interest rates
Fed Funds- interest rates bank charge one another to borrow term money and is set by the Federal Reserve
Prime Rate - interest rates commercial banks charge their most credit worthy corporate customer often serves as a starting price for other rate pricing and is based on of Fed Funds overnight rates
largest revenue component for a bank
net interest income
pricing
determinant of profitability, revenue, and expenses and also affects the demand the level of demand for a product or service.
ex. if a loan is priced too low and the demand is very high the revenue (margin) may be lower than expected. If a deposit is priced too loan, the demand may far less than anticipated, and the balances generated may not meet the funding needs of the bank
risk management program
measures, monitors and controls inherent risks
factors that affect elasticity - price sensitivity
existence of close substitutes consumer awareness of price difference length of time price difference persists Range of use significance & frequency of purchase non price benefits
price elasticity of demand
as the price increases the demand decreases of diminishes. But demand might diminish very quickly or verly slowly in response to the increase. When the response is quick the demand is elastic. When the response is slow the demand is said to be inelastic
the degree to which demand for a product decreases as the price for it increases
product mix strategies
Product mix -full range of products offered by sale by the bank. Could include more than 100 different product related services.
Product mix strategies- Product expansion Product contraction Product modification Product repositioning Trading up or down
Ignore photo
incremental financial value
revenue can be determined by: incremental gain on interest income incremental gain in investments incremental gain of deposits additional fee income
adverstising
goals is to inform, influence, persuade the target market to respond or act
product advertising focuses on selling a specific product or service
any form of communication paid by a sponsor for the purpose of informing and persuading the target market about products, services, organizations or ideas, by using advertising, an organization can control what is said about its products and services and when and where it appears
institutional advertising focuses on an image or brand
paid takes place through print, broadcast, out door, electronically
personal selling
is defined as one on one contact between a seller’s representative and a potential buyer to arouse interests and convince the buyer tor purchase
lays ground for long term relationships
matches needs with products and services
selling - AMA defitintion
The personal or impersonal process where by the salesperson ascertains, activates, & satisfies the need of the buyer to mutual continuous benefit of both buyer and seller
Theodore Levitt distinction of marketing and selling
selling is finding customers for what you have, marketing is making sure you have what customers want
qualitative data
info collected through in depth interactive interviews of a smaller number of consumers. This method is effective for determining basic needs, desires, and reactions to new product concepts and for identifying issues to be measured through quantitive research
sentiment
buzz volume
macro environmental factors
economic demographic social and cultural political legal and regulatory technological natural
micro environmental factors
banks customers competition markets producers suppliers publics Marketing intermediates
Bank has very little control over micro environment
revenue generation method of budgeting
This method is gaining prominence as a means to evaluate a marketing budget on the basis of how likely it is likely to affect the bank’s ability to generate revenue.
attempts to quantify the impact of marketing on 4 key areas Account acquisition account retention account balances account usage
helps bank marketer communicate the financial contribution to the marketing function and also present a case for the most effective use of capital. In essence the marketer is preparing an “impact analysis” for the marketing investmeant (budget) and attempting to determine an ROI or ROMI for the proposed budget.
The Management process
retained earnings
represent dollars that have been generated from operations that exceed liabilities that can be used for future needs
marketing aggregation aka undifferentiated marketing
avoids segmentation all together and target the mass market with a single offer
banks do when they build brand awareness campaigns
most often found in industries ie Morton Salt says when is rains it pours
Leads to low penetration
SERP - search engine results page
made up of: sponsor ads organic listings site links locations maps reviews social channels news and other related search queries
declining rate environment
asset sensitive bank-
loans will reprice faster than liabilities
liability sensitive bank-
deposits will reprice faster than loans and investments
source of funds
deposits and fed funds
untimely brand equity is determined by
customer
uses of funds
is an area that requires money
loans
investments
asset on balance sheet
ALCO
The committee charged with ensuring the bank’s risk, funding, needs, funding sources, and game are effective managed
Made up of : CFO , CLO, CMO, retail banking leader, business banking leader and sometimes leaders of trust/investments
assesses sources and uses of funds loan pipeline funding needs deposit and loan concentrations growth prospects general market and economic sentiment product/market expansion product design rate sensitivity effects for deposits and loans
concerns:
how to position bank in rising rate environment, demand rate environment, when it needs loan dollars, when it needs deposit dollars
direct marketing
is a term used to identify sales and marketing activities utilized to develop, offer, and deliver new financial services directly to customers and prospects
removes intermediaries in the delivery of the product or service
ie- invitation to apply
Important elements that contribute to the success of direct marketing:
- Accessible and user friendly customer info and the related understanding of the customer account possessions and purchase behaviors
- Competitive products and offers
- Effective communications
expected product
includes the product features that customers assume will be part of the product, ie - prompt and accurate payment of checks, accurate monthly statements
augmented product
includes all of the specific features and benefits that help the marketer differentiate the product from its competitors
Banking products are augmented by the level and quality of the service provided to this customer, the bank’s reputation, the staff’s experience and knowledge and so on
ie- packaged product accounts such as no annual fees, lower loan rates, and bonus rates
Razor example - the augmentation attempts to distinguish one generic product from another
generic product
provides benefit of core product
ie-checking account
generational segmentation
must take into account the demographics (typically age) of the segment and their behavior and commonalities (typically physiographic tendencies) to the most relevant to each generations
defined by a period of time in which they matured
objective of market segmentation
*identify a specific group of people and then pursue it with a tailored mix of product, pricing, promotion and distribution
*must be measurable, accessible, and substantial
must be possible to measure the purchasing power of the market segment
must be feasible to reach member of segment through advertising
must be substantial or sizable enough to generate a profitable volume
market segmentation
aggregating people into groups (segments) that have a common needs and will respond similarly to a marketing action
recognizes the wisdom on providing specialized opportunities that suit the needs of a specific of the overall market rather than trying to be all things to all people
objective of market segmentation:
to id a specific group(s)
pursue it with a tailored product
supported by appropriate pricing, promotion and distribution strategies
homogeneity- common need within segment
distinction- unique from other groups
response- similar responses to marketing
benefit segmentation
builds its strategy around the delivery of a specific benefit
ie- bank targeting the wealthy achievers segment, might offer after hours appointments with private bankers, educational se
lifestyle and generational segmentation
strive to understand the fabric and background of a group of people and the effects that live events have on their outlook and financial product utilizations
influences that customer’s years of maturation have on outlook
incorporates influences such as world and local event that contributed to the groups during their formative years ( demographics and psychographic)
target market selection
target should be consistent or compatible with banks goals
be consistent with its resources
should seek markets that will generate not only volume, but profitable volume
target market for which the number and size of competitors is small
business market segments - commercial banking markets
3 most used in business market
geographic
sales volume
industry segmentation
concentrated marketing
single segment marketing
the marketer selects one target market and develops one marketing mix strategy to address it.
enables firms to penetrate ,market deeply and to develop a reputation as an expert
demographic segmentation
categorizes market in terms of population characteristics, such as age, sex, income, occupation, and position for life cycle
ex-establishes a professsional banking group targets at an occupation segment
Geographic segmentation
divides the market according to geographic units . A firm may decide to market different products in different areas or to markets products in certain areas and not in others
ex debit cards and cds, where to locate a new branch or LPO
volume segmentation
refers to the marketer’s attempt to distinguish heavy, medium, and light users of a product.
in many businesses a small proportion of users will generate a large portion of sales
Pareto principal - 80% of profits come from 20% of customers
use to send different message
campaign
is a set of ads, keywords and bids that share a budget, location, targeting and other settings.
Campaigns are often used to organize categories of products or services that you offer
SEM - Search Engine Marketing
The process of gaining traffic and visibility from search engines through paid efforts
often referred to as Pay Per Click PPC
influencer
people and organizations who have purported expert level knowledge of influence in their field
influencer marketing
is a form or marketing that involves endorsement and product placements from influencers.
partnering with trusted personas, leaders, or voices in a particular field that provide reviews, endorsements or recommendations of brands and products
content marketing
is a strategic approach focuses on creating and distributing valuable, relevant and consistent content
net promoter score
asks single questions of a customers “how likely are your to recommend this company to a friend or colleague? scale of 1-10
customer with 9-10 ratings are promoters; 7-8 passives, 0-6 detractors
% promoter -% of detractors= net promoter score
know net promoter score can help improve customer service and help determine and create processes to improve
primary data
customer data POS intercepting customers after transactions and asking a short series of questions group discussions personal interviews surveys
external secondary data
info from regulatory agencies, ABA, Federal, State and Local Govt, & media
3 elements of collecting data
selecting a survey method
designing a questionnaire
fielding the study
intercept interview
often conducted after completion of a transaction
stopped in bank lobby
effective way to gather qualitative info
goals of advertising
to stimulate awareness and use of profitable products and services
to achieve a diversified financial base by attracting a steady influx of new customers
to promote special events
to promote a favorable public reaction to the bank and issues affecting the bank
Should be incremental, measurable, specific and fully communicated to all parties
publics
are simply the audiences with which the organization is attempting to communicate; most organizations have many publics
marketing vs public relations
marketing focuses on revenue generating activities
public relations focuses on non-revenue generating activities
paid communications
include TV, radio, newspaper, online, marketing collateral
public communications
include: articles written about bank. printed press releases and commentary by TV and radio personalties
public relations as defined by Public Relations Societyof America
public relations helps organization and its publics adapt mutually to each other
marketing intermediaries
a third party that helps the seller promote and distribute the products to the consumer
complaints
any written or verbal communication expressing dissatisfaction with your banks products or services
May be shared with regulators.
possible violation of law
Risk to bank: reputational, financial, limit ability expand
complaint management process
complaint acknowledge investigation resolution communication
responding to complaints
provides feedback to the customer regarding the complaint
opportunity to improve client relations and perception of bank
can improve team skills and awareness through training
focus group
a discussion among 10-12 people who are representative of the target audience and who are led by an experienced moderator
excellent resource to receive feedback, however scope is limited to small group
generates excellent subjective observation about products and delivery channels
identify topics that require additional discovery
surveys
primary method used to collect primary data
CTW
click to website
UTM tags
urchin tracking module
email banners, display ads
promotion mix
the unique combination of 4 promotional activities that in profitable demand for products advertising sales promotion public relations personal selling
strategic planning
The vision, mission of the business, defining its existence and purpose. Strategic marketing planning complements the organizational strategic planning
price
what must be exchanged in return for receiving a good or service
new product development
Most new products developed by banks are new to the bank but not new to the banking market.
This type of “new” product development falls into one of four categories:
- Modification of existing products - new cd during rising rates “rising rate cd”
- Extension of a product line - development of a lifeline checking for low income cust
- Development of a banking related product - start sell of annuities or mutual funds
- Diversification into new product categories - expand into not traditional banking services
New Product Development Process and Stages
idea generation- screening out ideas that are not viable or likely to succeed
concept testing -is a function of marketing research
business analysis to forecast sales and profit
product development
Product testing and test marketing to determine customer acceptance
Implementation and commercialization of the new product
evaluation
primary data
data collected from original sources for a specific. Findings based on answers to questionnaire administered to individual customers or prospects are and example
marketing mix
the combination of 4 marketing activities product development pricing promotion (Place) distribution
aimed at satisfying demand in the target market
marketing objective
a written statement giving directions to an organizations short term product, pricing, promotion, and distribution decisions
6 steps of market research
define the problem planning and designing the research project collect data analyze data report the research findings integrating the data into planning
marketing objective
identifies desired direction
a broad statement ot direction
can set the tone and theme for all groups in the bank
can be supported by many goals or just one
marketing goals
specific result
should address specific measurable results that are attained in pursuit of a broader corporate or financial
may focus on a particular product line
goals should be carefully thought out to support and help attain marketing objectives
Marketing goals should possess the following 5 characteristics:
- They should be measurable
- The should complement the bank’s financial goals
- They should be appropriate for the level of the job
- They should be flexible
- They should stretch the bank and each department to achieve excellence
strategy
describes the route the bank will take to reach its destination
What will be done
tactics
outlines the specific actions to be taken, who is to take them, when and what cost
how it will be done
marketing planning process objective and goal
objective- will be used to identify a desired direction for results - a broad statement of direction
goal will represent the specific result
action plan
is made up of strategies and tactics
compliance
the interpretation and application of banking laws, regulations and guidelines
legislation
the act or procedure of making laws
types of compliance related risks
compliance risk legal risk reputational risk financial risk organizational risk strategic risk
FFIEC 3 areas of social media risk
compliance/ legal
reputational
operational
product focus
when focus is directed to a product offering or a line of business offered by the bank (target product)
product life cycle
the relative state of the product in terms of introduction growth maturity decline
more promotion elements may need to be used when its is initially launched and again at the maturity stage
introduction state of product life cycle
characterized by slow growth in sales as the product is introduced and the market gradually becomes aware of it. Profit curve shows a loss because of heavy expenses incurred introducing the product, in addition to development and advertising
growth stage of product life cycle
acceleration in sales as more people become aware
attracts competing firms to enter the market
ex HELOC
maturity stage or product life cycle
the profitability of a product in the growth stage attracts intense competition as the maturity stage approaches
maturity is characterized by a slowed rate of growth as most prospective buyers have purchased
Aggressive advertising
ie, checking account, debit card
decline state of product life cycle
when total sales of a product take a marked downturn the product has reached the final state of the product life cycle
ex. savings accounts because of MMA, also social changes - brick and mortar
characterized by fewer firms offering the product, reduced promotion and restricted variety of product offering
swot analysis
strengths
weaknesses
opportunities
threats
competitive strategy
identifies and defines its competitive advantage for the purpose of creating and sustaining superior performance
It describes how the organization differentiates itself in a numbers defined market place
it is a critical document because every decision the bank makes relate to its marketplace and its customers should reflect the competitive strategy
core values
are at the very heart of the organization, and they act as the anchor for the bank
represent the true personality of the bank
reflect the attributes that are considered priorities in the daily operation of the business. In banking, organizations often identify as strength, stability, integrity, customer-focuses, honest and respect as core values
mission statement
governs the overall direction and purpose of the bank. A mission lends a bank its unique identity and differentiate it from the competition.
outlines what must happen to realize the company’s vision. a brief statement of why organization exists and the purpose of the organization
may include references to exceptional customer service, meeting the needs of the trade, provind a fair return to share holders, etc
objectives and goals support the mission statement
changes very little over time
corporate, financial,, and marketing objectives should support the mission statement
vision statement
sets tone and overall stage for how the bank is and will operate
corporate direction
is usually affirmed by the organizations vision statement, mission statement, core values, competitive advantage and brand expectations (sometimes referred to as brand promise)
brand
the banks brand reflects the competitive advantage defined in the competitive strategy
what customer and businesses in it’s trade area think about the organization
direct - one on one contact with bank employee, bank sponsored event or account opening
indirect - advertising, community sponsorships, anything that carries brand identity in the market place
what the MOST aspect of a bank’s brand?
building credibility and equity
bank’s vision
a bank’s vision should focus on the future and represent a picture of the desired destination or a realistic dream for intended pursuit
vision statement example: Become the largest employee owned bank in an area
branding
process by which the bank seeks to influence the marketplace so they feel a certain way about the brand.
Its an influential effort that is based on a single idea of what the brand represents, stands for, and means to both the bank and the market place.
connect emotionally and creates a memorable experience
objective and task method
budget is based on what it will cost to achieve objective and goals of the organization
This method is more complex to implement but is effective over time
Most rational
competitive parity method
bank determines what competitors are spending and following their lead
essential lets competitors determine budget
It fails to take into account the effects of variations on creativity, different uses of media, the various internal capabilities( or lack of capabilities) from institution, timing of campaigns, and a bank’s image and recognition level in its market.
incremental method
a bank increases budget by a certain % each year
based on inflation, growth rate of bank
May be dictated by a planner or budgeted whose primary objective is to make the bottom link show a targeted ROA
Assumes that market and competition are likely growing at rate of inflation
This does not encourage the marketer to question the technique being used or to take a fresh look at objectives
method does not factor in tasks and objectives to meet goals
% method
Flawed because it is based on past performance rather than objectives for the future- based on current assets and not where the bank is heading.
ie 1/10 of 1% of total assets
1 billion $ bank = 1 million on marketing spend
omni channel management
optimizing customer experience
compels the organization to provide consistent product and customer service no matter where their customer journey begins
mystery shops
provides highly target, first person assessment of employee behavior
repeatable process that can be used throughout organization and can be used to track performance trends and even set goals for ongoing service levels
RACE Model. KPIs
Reach- visitors, impression, fans
Act- leads, shares, time on site, do video views, comments
Convert - enrollment, open accounts, closed loans
engage- referrals, repeat business, share of wallet
frequency
the average number of times an advertising message reached the same person or household during a defined period
How often a target has received communication from the bank
reach
total number of people exposed to a given media at any given time
liabilities
a source of funds that the bank must repay on request
are the debt or borrowings of the bank - deposits, FHLB borrowings
balance sheet
assets
use of funds - loans &investments which represent money due to bank
balance sheet
earning assets generate revenue
non earning assets
ALLL - a contra asset (negative balance items) reserve for loan loss
income statement
interest income non interest income realized gain on securities non-interest expense - salary, benefits, premises, fixed assets, other non-interest exp income taxes
net income
balance sheet
3 main components
assets
liabilities
retained earnings and equity
loan to deposit ratio
=loans/deposits
assesses bank’s liquidity
standard 90-92%
you have to have enough liquidity to survive if rates change
current deposit rates are driven to fund loans and lower cost deposits the better margin and return you will have on loans
closer to 100% you will have to borrow funds and that impacts your margins
high= strong loan growth and increase on interest income
low= deposit growth is strong and indicates lower interest income
voice of customer
customer centric
relevant to capture gaps and needs of customer
improve satisfaction, product delivery, loyalty and revenue
Ways to capture VOC: customer interviews, mystery shops, focus groups, advisory boards, app feedback
Important insights:
Why did customer select your bank?
What can you do to make their. Experience better?
Are they likely to recommend you?
Transactional behavior patterns
Preferred banking and communication channels
share of voice
is a measure of the market your brand owns compared to competitors
acts as a gauge for your brands visibility and how you dominate a conversation
paid share of advertising
RAROC - risk adjusted return on captial
-capital allocations
based on how much risk is involved
payback
calculation determines whether the results warrant investment in the specific marketing program and its the heart of ROI & ROMI
determines whether the return generated over time by a specific makes the expected return
5 ways to improve profits
increase interest income reduce interest expense reduce risk and therefore provision and capital allocation increase fees reduce operating expense
as banks get larger….
balance sheet moves slower - you have to manage the trends of the balance sheet
recognize that loan demand is growing faster than deposits
tailor marketing campaign where you need it at bank
two types of reporting to leadership
strategic reporting-
connect strategic objectives
map strategic goals - SMART goals
KPIs or balanced scorecard
Campaign reporting
ROI
Dollar returned per marketing dollar spent
physiographic segmentation
involves classifying the market in behavioral terms according to lifecycle, life style , or personality
profile
young professionals on fast track for debit and cc sales
conservative consumers who want to protect their savings by marketing five year fixed rate investments
ECOA - Equal Credit Opportunity Act
Reg B
blanketed under “Fair Lending”
cannot discriminate on a “prohibited basis”
race, sex, color, age, religion, national origin, marital status, receipt of public assistance, rights under CCPA
Fair Housing Act - FHA
blanketed under “Fair Lending”
applies to residential loans
prohibits discrimination: race, sex, color, religion, national origin, handicap, familial status
requires Equal Housing Logo
HMDA - Home Mortgage Disclosure Act
Reg C
requires banks to report loan data to the public
primary to assure CRA compliance and Fair Lending Laws
Real Estate Settlement Procedures Act - RESPA
Applies to RE secured loans
prohibits practices such as kickbacks and referral fees between settlement providers, which result in higher cost and reduced quality to consumers
provides consumers with uniform and understandable info about RE mortgage transactions and costs
Truth in Lending - TILA
Reg Z
helps consumers make informed decisions about credit by requiring consistent and uniform disclosures of terms and cost of credit
outlaws lending practices
outlines needed disclosures to properly inform customers
consumer loans only
Fair Credit Reporting Act FCRA
prescreening credit reporting agencies for email link
permits sharing of transaction or experience info with affiliated companies regardless of which had firsthand experience with customer (as long as you pay for it)
Fair and Accurate Transaction Act - FACTA
must give notice of customer before use of credit
allow to opt out
it restricts how info can be used (not share)
Controlling the Assault of Non-Solicited Pornography and Marketing Act - CANSPAM
CML emails labeled
opt out options
senders physical address
no false headers
Do Not Call
prohibits calls to customers on the registry, unless they have an established relationship
business relationships: transacted business in last 18 months, application in last 3 months
check registry monthly
ADA
physical buildings
ATM/ITM
website - audio/video
applies to public accommodations, employment, telecommunications and public services
Dodd Frank Wall Street Reform and Consumer Protection Act
created in response to the economic crisis of 2006-2009
office of thrift supervisions was replaced by Federal Reserve for savings and loan holding company supervision, and Office of The Comptroller of the Currency for Federal savings institute supervision
strict controls on larger bank holding companies ($50+ total assets) and systematically non-bank financial companies
established CFPB
responsible for consumer protection laws except CRA
mortgage originators must act in the best interest of the consumer and their ability to repay the loan
Gramm-Leach Bliley Act - GLBA
Reg R
permits banks to provide new business lines and consumer services-stock, brokerage, insurance
frequency of CRA exams less than $250mil and outstanding rating, pushed to every 5 years
prohibits approval of unitary thrift as of May 4, 1999
safeguards customer information PII, 3rd party opt out options, sharing of privacy statements
Reg R may broadly advertise trust and fiduciary services. Cannot advertise on a stand-alone basis that is Security Brokerage Services
Unfair, Deceptive, or Abusive Acts or Practices
UDAAP
injury cannot be reasonably avoided by the consumer
is deceptive to a person reasonably acting
considers audience
takes advantage of lack of understanding
USA Patriot Act
strong measures to detect, prevent, and prosecute terrorism and international money laundering
Included revisions to BSA
Requires banks to have a CIP. Compare customer names to those on government lists of know or suspected terrorist/organizations
generally, applies to insured depository institutions and US branches and agencies in foreign countries
Member FDIC
all insured depository organizations include “FDIC” when an ad promotes deposit accounts, services for bank itself
does not include advertisements of non-insured specific products
Truth In Savings Act - TISA
Reg DD
ensures that consumers have comparable and consistent formatted info to make informed decisions about accounts at banks
non commercial deposits
advertising cannot be misleading, inaccurate, misrepresentation
can only be called free/no cost if there are no maintenance activity fees
cannot refer to interest as a profit
must state rate of return as Annual Percentage Yield first before using APY
must state if rate changes minimum balances opening $ fees may change, reduce earnings early withdrawal penalties interest paid out at closure
bonuses if over $0 APY time require minimum balance when bonus is paid
overdrafts fees for each overdraft transaction fees repayment period then bank will not pay OD
Growth Strategies
Market Penetration - selling current products to current market
market expansion - selling current products to new market
product expansion - developing and selling new product to current market
Product/market expansion - developing and selling new products to new markets
marketing budget expenditures
for 5 core activities
advertising and content marketing sales promotions marketing research training in sales and customer service public relations
intermediary
distribution channel that increases the availability of convenience services, increases it use or the revenues from its use, helps maintain existing users, increase use among existing users, or attract new users
technology
offers banks yet another opportunity to segment their markets, this time based on people preferences to bank online rather than in a branch
deposit share
when a bank has below average balance compared to the market, it has increased its marginal cost per account
above average - lowered its marginal cost per account. This occurs because bank is spreading fixed costs across fewer accounts which decreases cost per account and increases revenue per account
promotion strategy
focuses on communicating the availability of products and services to target markets
ways a bank makes money
interest income
non-interest income
investments and securities
typical divisions of a community bank
retail
business
trust services
NCUA
Federally chartered and federally insured credit unions
OCC
National banks and Federally chartered S&L associates
Federal Reserve System
Bank holding companies
state banks that are Fed members
FDIC
state chartered commercial bank that are not Fed members
state chartered savings associations
Uniform Bank Performance Report
UBPR
public information published from call reports
pay attention to
interest income
non interest income
efficiency ratios
strategic goals for departments and business lines
product and service pricing
target audience for products and services - use CRM & MCIF to support sales
what are your KPIs
internal and external audiences
segmentation and measurement
metrics to determine brand impact
top of mind awareness balance sheet and income statement promotional ROI digital and social attribution dashboard
measure digital success with following metrics
unique page visits page view time on page social shares comments and interactions bounce rates inbound links
effectiveness - roi
deals with the message, the media used to deliver the message and the results generated
requires setting aside “control groups” for measuring the relative impact of a single variable
efficiency - roi
deals with the ability of the marketing program to get the best results for the marketing money invested
is the calculation of leverage - total return generated versus the total investment
goal is to create highest leverage
market focus
when the organization’s focus is directed to a geographic area or a specific group or retail or business customers
ways to address CRA requirements
lending corporate giving and sponsorships educational programs community development volunteer opportunities
regulations
a government order having the force of law
bottom up planning - marketing planning strategy
allows the staff to submit concepts and ideas for objectives and goals, which encourages a closer to the market approach accountability and buy in from the staff
top down planning - marketing planning strategies
involves senior management setting the directions, vision, and mission objectives and goals for organizations and asking staff to implement
core product (benefit)
is the essential benefit that the customer is buying
ie. the ability to pay with products or services with a debit card or check or electronically
market share of assets
you can access commercial bank deposits and asset info at FDIC.gov
to determine your share add all total assets for banks in your market and divide by your total assets. this determines the market share of assets
market trends
what is the marketing professional identifying when tracking the share of wallet, growth and product lines of other banks
marketing management
Marketing management is the analysis, planning, implementing and control of the program designed to create, build, and maintain mutually beneficial exchanges and relationships with target markets - Phillip Kotler
orchestration of strategies, tactics, implementation and delivery
customer profile
should include demographic information about: age distribution occupation education level income ethnic composition
may include deposit and lending needs and over all financial goals
millenials
are in the life stage that influence spending, families, housing, and other significant contributions to economic growth
quantitive research
a research method in which data are collected by presenting a sizable sample of consumers with carefully prepared questions, either verbally or in writing, the result is statistical data about consumer attitudes and buying behavior
#of follower shares likes reach bounce rate clicks engagement
5 principal segmentation alternatives
geographic demographic psychographic volume benefit
The Bank’s CEO has asked the marketing department to develop an advertising campaign for a spring HELOC. What is the first step?
Define business goals
2 reasons why product is key element in marketing mix
Product is firm’s reason for being (to satisfy need of a customer)
All other elements of marketing mix revolve around product
Recency
How recently the targeted customer or prospect has received a communication from the bank
Functional organization
Has a specialist who supervise various functions such as advertising, sales promotion, and research are coordinated by the marketing manager
Product management organization
Similar to function management organizations, except that the bank’s marketing department includes another manager or group of managers with product responsibility
Marketing research
Is the acquisition and use of information that can be beneficial to the marketing management process. It is the transformation of information, turning raw data into compelling knowledge about the bank’s customers, market, or competition.
All banks regardless of their size , should have readily available and up to date information related to:
Bank’s geographic market
It’s customers
Potential customers
It’s competition
It’s position relative to the competition
The awareness and perception of the bank’s brand
Terminology of marketing strategy
5 good reasons for making the effort to establish objectives and goals
- Objective and goals serve as a guide for planning strategies and tactics.
- Objective and goals for the basis for the marketing budget process.
- Goals for the basis for evaluating performance.
- Without goals the bank will not know whether its strategies and tactics are working.
- Objective can help build team spirit.
Brand awareness
4 categories that should constitute the analysis of the banks competitive environment
Operating statistics
Market share
Comparison of marketing strategies
Comparison of products
First year revenue
Revenue from a promotion prior to eliminating marketing costs
Net revenue
Revenue from a promotion after eliminating costs
WAR
Weighted average rate
Calculation performed on a portfolio of like deposits and loans to determine the average rate of the balances
Spread
For deposits: yield on loan portfolio minus WAR of the promoted deposit products(s)
For loans: WAR of sold loan products minus cost of funds
WAR simply means the average interest rates you are receiving on all loans or specific loan portfolios (excludes leases, investments)
Psychographic segmentation
Involves classifying the market in behavioral terms according to lifecycle, lifestyle, or personality profile.
Ie. Young professionals on the fast track is a a prime market segment for debit and credit card sales
