Many bank executives still view marketing as the champion of brand building, essentially a middleman that funnels leads to sales and adds little value to the bottom line.
But new digital capabilities are dramatically expanding marketing’s role in banking, which is morphing from a cost center into an engine for top- and bottom-line revenue growth. Perhaps more than any other banking function, marketing holds the greatest potential for direct revenue capture because of its ability to create immediacy and relevance for customers.
Marketing’s rise to prominence isn’t confined to the banking sector. Eighty percent of marketers expect to be driving revenue for their companies in three to five years, according to the Economist Intelligence Unit, although 68% report they’re currently viewed as cost centers.
What’s driving the change for banks? Marketing’s rise is rooted in multiple factors, including changing demographics and the digital disruption that’s upending all segments of the financial services sector. It’s also traceable to the complexity of the task at hand: connecting with profitable, older customers while communicating value and relevance to younger consumers. Only marketing’s laser-like outreach and engagement can strike that careful, nuanced balance.
Achieving the balance requires a deft touch and some surprising realities for banks. Those aging baby boomers? Sure, they possess exceptional purchasing power, but they also display a growing digital savvy. In addition to outspending other generations on consumer goods and services by a staggering $400 billion per year, boomers spend more time online than watching TV. The hurdle for banks is convincing members of this tech-savvy, prosperous demographic to expand their engagement beyond basic checking and savings accounts.
Packing far less purchasing punch so far are millennials and their successors in Generation Z. Fewer than half of millennials have investment accounts. Yet it’s the younger customers who are raising the digital bar in banking for customer experience.
How can banks make those targeted customer connections? Driving revenue means not just rethinking marketing, but also banking’s identity. It means understanding how customers see you, from the outside in. In the digital era, banks are increasingly becoming marketplaces. The result is that we’re starting to see bank websites feature non-banking services in addition to traditional products and services — a mashup that leverages the ecosystem of intermediaries and services in the quest for customers.
Banks are forging partnerships that enable them to offer insurance for products that require it, or extended loyalty programs that offer banking customers points and awards from travel and hospitality providers. The goal is to keep customers on banking websites, even as banks battle for customers amongst themselves as well as with financial technology (FinTech) startups and non-bank competitors such as Google and Amazon.
Your bank’s website is a must-have, but so is going to where your customers are. Younger consumers have already made their buying decisions by the time they land on bank websites. With a few taps-and-swipes, they’ve collected ideas and recommendations from friends, social media posts, and online search results. They’re educated by the time they arrive at your site. So, getting out into social channels is key, as is marketing your bank’s products and services with digital advances such as programmatic advertising placements.
As marketing sharpens its skills to better leverage insights from big data analytics and develop interactive strategies, social media is playing a growing role for banks. The reason? Bank marketers who engage customers on popular social channels enjoy a loyalty advantage over competitors who don’t, according to our internal data. Financial services firms’ use of social media marketing is up 31% year-over-year.
As digital disruption externally challenges banks, marketing often proves to be an internal disruptor, pushing engagement and distribution models that support new strategies such as event-driven marketing. For example, once a customer pays off a car loan, a bank might offer another loan or an investment recommendation based on the customer’s spending patterns and financial goals and deliver it via personalized messages through mobile or online channels.
Achieving event-driven marketing, however, remains a challenge for banks, many of whom still organize themselves in silos. Successfully extending relevant offers to customers assumes that the news of a customer’s auto loan payoff reaches the mortgage and investing departments — and that the department can act on it. To capitalize on the new revenue opportunities, banks have to accelerate the process of dismantling their organizational silos. Every digital step moving forward depends on it.
Take real-time marketing. It’s critical to reaching hyper-connected, easily distracted digital customers, and it requires a unified organization that’s ready to act. In the mobile-first world, real-time micro-moments are key to building customer engagement and to marketing’s evolution to a revenue center. As defined by Google, micro-moments target customers or prospects with content that’s relevant. Banks might use micro-moments to extend mortgage-related offers to prospects whose digital trail reveals they’ve been on real estate websites or viewing and making home improvement posts. They might target attractive credit-card offers at critical moments in the customer’s life journey such as the purchase of a home or the birth of a child.
Creating micro-moments, however, requires banks to empathize with customers and develop frictionless solutions that make their lives easier. It’s a dramatic shift for an industry accustomed to viewing customers as accounts and transactions. Putting the “custom” back in customer requires a healthy amount of data to micro-segment appropriately, and if there’s anything banks have a lot of, it’s data. Pairing all that data with advanced analytics allows banks to source and maintain customer insights from both within and outside. By building rich customer personas, they can personalize offers down to the individual level, leading to higher product acceptance, lower attrition and improved customer acquisition.
With limited marketing budgets, it’s always a challenge for bank chief marketing officers to decide where to invest. Today the focus is on the customer journey and tangibly impacting customer experience and decision making at multiple points, thereby creating opportunities to generate direct revenue outcomes.
Mr. DeLaCastro leads the Global Digital Banking practice at Teaneck, N.J.-based Cognizant. He can be reached at Steven.DeLaCastro@cognizant.com.