Do Negative Ads Work in the Battle between CU's and Banks?

With the Republican Presidential Primaries in full swing, it brings to mind a recent social media campaign from a credit union in New York. The credit union in question is Summit Federal Credit Union in Rochester, N.Y., which produced a video entitled "Sh!t Banks Say". you can view it below.

If this were the primaries, the banks would be Mitt Romney, representing the institutions who are gouging consumers with fees and are more interested in profits than service. Credit Unions, on the other hand, would be Rick Santorum, emphasizing the "moral bankruptcy" of these institutions and his efforts on behalf of the working people. All communicated through a series of negative ad campaigns from both sides.

As noted in numerous publications and blogs (including Bank Technology News and Snarketing 2.0 , a blog from Ron Shevlin ), this is an ongoing trend for credit unions; to bash the banks. However, as also noted in these articles, these negative efforts do very little to emphasize the benefits of a credit union. Much like our current crop of Republican candidates, it's more the danger of electing the other than providing a clear, positive differentiation of their candidacy.

Whether this will work in the political realm is to be determined in the months ahead. So the question is; Are these effective tactics for credit unions? What do you think?

Who Loses when Consumers Debank?

As I started catching up on my reading, I came across Ron Shevlin's recent post on Snarketing 2.0 last week. Titled The Debanked: The $1.7 Billion Threat to Banks, Ron defines the these customers as " Mainstream consumers who willingly opt out of the traditional banking system." These could be consumers who have chosen to manage their daily financial needs by using prepaid cards. Debanked consumers can be distinguished from the UnderBanked as they are typically young, highly educated, and employed or employable. I think of many of the young people who've participated in the recent Occupy Wall Street demonstrations.

The $1.7 Billion represents the fees lost by banks as these customers leave. So who in the financial services industry gets hurt the most? In my opinion, it is the community banks and credit unions. The Mega-Banks have been willing to give up these customers and the related fees (Bank of America's decision to decline any Reg E overdrafts on debit card transactions, for example). Community banks and CU's don't have that luxury.

So if you are a community bank or credit union, don't miss the boat (although some would argue they already have). Look at a prepaid card program as an add-on to regular checking options. It's what a whole new generation of consumers are looking for, and WalMart and other retailers are more than happy to provide it.

Mobile Banking and Customer Behavior

There have been a number of recent articles and studies focusing on customer behavior and mobile banking. The most recent was in the American Banker entitled"Tech-Savvy Crowd Demands More Personal Service from Banks, Not Less". (By the way, you've gotta love any article that uses the term Luddite)It suggests that increased mobile use by customers may not translate into decreased branch traffic and less phone calls. My question is: Who said it would?

As my friend Ron Shevlin noted on his blog, Marketing Tea Party, the mobile channel is so new, "it doesn't exist for the vast majority of customers." Given the limited adoption (much less banks offering the service), how can anyone make any inferences about how it will impact FI's and their customers?

Our organization rolled out a mobile about eight months ago. It wasn't in the hope that it would offset any costs by reducing interactions in other channels. It's about customer convenience and acknowledging the ubiquitous nature of mobile devices across all generations. Perhaps some services will, in fact, reduce bank visits. The depositing of checks through your mobile device would certainly qualify as one example. Until there is mass adoption of the technology, mobile is just another channel for our customers to use. No more, no less.

Some random thoughts and comments

Some random thoughts and comments on a hot and muggy day in Baltimore.............

• Recently had a conversation with an industry analyst about social media. She commented that many banks have avoided social media activity until they have an exit strategy. Huh? Did you have an exit strategy when you started your corporate website or built online banking? Social media is an extension of, not separate from, your activities through the web. No more, no less.



• I've been really impressed with the way Jesse Torres, CEO of Pan American Bank uses social media. Their Facebook page provides lots of information about their activities in and around their community. He isn't afraid of getting involved in controversy either, as you can see from this post on the blog LA Eastside.



• I came across a blog post focusing on a Twitter marketing strategy to bankers. I've found Twitter to be a great way to connect with others in the industry, stay up to date on trends, and generally stay informed. The people/brands I follow offer relevant information from both themselves and others. If all I see is a constant stream of self serving tweets, I' m not following you.



• Speaking of people in the industry, Ron Shevlin of the Aite Group is one worth following. He has some terrific insights and perspectives (and the occasional rant) on his blog Marketing Tea Party. Plus, he's attended over 75 Dead concerts over the years, which makes him a rock star in my book.