Banking Offers Wealth Of Sales Opportunities

TVNewsCheck, June 29, 2012 11:11 AM EDT Savvy stations will target banking institutions for sales calls. Competition in the industry is fierce — there are more than 6,400 commercial banks, 1,100 savings banks and 7,200 credit unions competing to get the customers. Remember to focus on these five areas — key product, customer, partners, timing and budget. And make sure you're putting together a fully integrated program including broadcast, digital, mobile and social where appropriate. Philip Jay LeNoble,Ph.D.of Executive Decision Systems,Inc of Littleton,CO says, "Many financial institutions are local-direct accounts and offer great opportunities to help them compete with the large banking firms." By Susan Novicki The banking industry represents combined annual revenue of approximately $700 billion and this translates to a tremendous opportunity for stations to garner revenue. It was the fourth highest spending ad category in 2011. Competition is fierce — banks and financial institutions are going after everyone from individual consumers to small-, medium- and large-size businesses to obtain their business. And there are more than 6,400 commercial banks, 1,100 savings banks and 7,200 credit unions competing to get the customers. Each bank is focusing on targeting a specific customer so it is important that we understand that in developing an interactive program for them. Story continues after the ad The banking industry has been through a major transition during the last few years starting in 2008 with the mortgage crisis. But the industry has been recovering, with earnings in 2011 of $126 billion, up 47% from 2010. The problem for 2012 is that the loss reductions that have created the earnings have run their course. The main engine of bank revenue — interest income — is under pressure from low interest rates and sluggish growth dynamics. If interest rates and loan growth stay low, net interest income could conceivably fall 13% in 2012. Other limiting factors on bank earnings include difficulty in raising fees, a volatile global economy and increased overhead as banks absorb the costs of new regulatory compliance requirements, specifically with the Dodd-Frank financial reform law. With this, bank profits could fall by 7% to $117 billion for the full year. The economy is very slow to rebound so consumers have not been aggressive to get loans. As with every other industry, consumers are in the driver’s seat. Last fall when Bank of America tried to create new fees there was a huge viral social media blitz that forced the bank to backtrack on administering the fees. But with the loss of interest income, banks will have to attempt to recover lost revenue by introducing new fees; requiring higher minimum balances on customer deposit accounts; and providing incentives for customers to use credit cards. However, these attempts to grow fee revenue will contribute only marginally to noninterest revenue. Everyone is aggressively working on gaining market share in this volatile industry. The No. 1 priority is to increase their financial institution’s lending portfolio. They hope to do this by cross-selling mortgages, auto loans and credit cards to existing customers. But the lending market and the entire economy is not cooperating. As stated, there aren’t enough consumers brave enough to apply for credit right now and only a handful of these meet lenders’ new stricter requirements. With limited avenues for growth, the market will be hyper-competitive over the next 3-5 years. In this environment, it will be critical for each bank to be very clear on how it is going to compete in win in this market. Adroitly targeting specific customer segments; creating products that go beyond deposit and checking accounts; and delivering these products through highly competitive (physical and virtual) sales forces will be competitive necessities. With the digital influx, there is the opportunity to further personalize offers, market to customers and build loyalty. Eighty-four percent of financial institutions have said that they are either going to maintain or increase their marketing budgets for 2012. This represents opportunity for us. It is important to understand the industry and the factors affecting it when we work on potential prospects. We also need to do research on the bank, credit union or other financial institution we are calling. Remember that different types of companies have different initiatives. •Credit unions, for example — each institution decides who they will serve, their rates are usually lower than traditional banks, they serve their customers with products similar to banks but they are not for profit. The surplus revenue goes back to the members in the form of dividends. Ninety one percent of banks in the U.S. are small community banks and focus on local families and small businesses. •Commercial banks represent 80% of the total banking revenue. Financial literacy is a hot button for banks, yet the biggest concern is customers switching banks and the majority of people switching are moving from the large commercial banks to savings banks and credit unions. Most of the time this is because of new fees being introduced. However, shopping for banks is an opportunity for us to create promotions to drive the business. Trends to discuss with decision makers include mobile banking and social media. Digitally, there is growth in many areas, especially because of the increase in smartphone users, e-reader users and tablet users. With this, online video ad spending will reach $53.1 billion and is the fastest growing segment of online advertising. Don’t forget that both banks and credit unions want to align themselves with the community and differentiate themselves in doing this from their competitors. Do you see the opportunity yet?