Targeting New Movers for Enhanced Growth

According to the U.S. Census Bureau, the national mover rate declined from 13.2% in 2007 to 11.9% in 2008 - the lowest rate of moves on record. Still, over 30 million people changed residences during this one year period, representing a powerful opportunity for new customer growth. In fact, even though the demographics of movers has skewed younger, with a higher percentage of renters moving, this segment continues to outperform all other prospect universes from a new customer acquisition perspective.

While many of my clients continue to focus on checking offers for the new mover segment, more banks are realizing the benefits of promoting products such as money market accounts and even equity credit and investment services.
This is because people tend to more thoroughly evaluate their financial position during the three months surrounding their move, with more than 50% changing and/or opening new financial relationships during this period. It is believed that the process of portfolio evaluation has even increased over the past 18-24 months as the mortgage process has become more stringent.

The keys to reaching this transitional segment include; 1) being first in the mailbox of the new mover after their move when there is less competing clutter, 2) building a system for efficient and ongoing processing of new names and delivery of offers, and 3) measuring the impact of your new movers program and testing offers and timing.

Historically, many retailers such as Bed, Bath and Beyond, Pottery Barn, and local welcome wagon programs filled mailboxes with postcard format offers immediately after a household's move. Recently, however, many of these same retailers are opting to send much larger catalogue style communications 1-3 weeks after a move is completed. I also have seen some financial firms improve their ROI by using Standard Class mail as opposed to First Class since the difference in delivery dates by the post office has narrowed significantly over the past few years while the difference in cost has skyrocketed.

If a new movers program is not part of your neighborhood marketing process, you are leaving money on the table and losing out on a great opportunity for account and relationship growth. As the mover rate begins to rebound over time, a strategy for reaching this transitional segment will pay off.

Large Banks Not Adequately Serving Small Businesses

While there is little denying the revenue potential of serving the financial needs of small businesses, there continues to be a significant disconnect between small business needs and the way large banks serve this segment according to a research report released today by Aite Group (Small Business Opportunities: Are Large Banks Missing the Boat?). And with the continuing financial crisis, availability of sophisticated cash management products to smaller banks and the significant negative press around large banks, this gap in expectations is widening. In fact, the percentage of large bank small business customers describing themselves as 'extremely satisfied' with their primary institution has dropped from 50% in 2007 to 33% in 2009. This has led to a shift of small businesses considering a community bank to be their primary financial institution from 24% in April 2006 to 35% in April 2009.


According to Christine Barry from Aite Group, the low satisfaction rates and disappointing cross-sell ratios are due in large part to large bank's failure to properly segment the small business market, thereby improving the understanding of the market. Without adequate segmentation and research, it is difficult to provide a personalized experience based on the small business' unique needs.

Another challenge is that it is difficult to even identify all small businesses since as many as two-thirds don't have business banking accounts according to a 2009 Javelin Strategy & Research report. These relationships may pay lower fees by being handled in the consumer platform initially, but they are quickly underserved as they grow and their needs expand to include payroll, specialized lending and enhanced cash management services.

One of the responses to this need to better understand the underserved small business banking customer is a shift in reporting structure at some large banks from being handled through the retail or commercial side of the bank to being handled by a standalone small business unit, where specific offline and online products can be developed and needs adequately researched. Another response has been the introduction of new services for this segment including scaled down cash management services, invoicing and payroll services and personal/business financial management products.

To win in the small business banking competition, it will be imperative to segment small businesses beyond a size categorization that neglects industry or needs segmentation. Data collection will also need to be enhanced since the amount of public information is much less reliable for small businesses than for retail customers. Finally, there needs to be constant direct communication with small businesses to demonstrate the desire to serve this segment and to provide ongoing leads for a better trained sales force.

Disconnect Seen Between Small Business Needs and Availability of Credit

While there are signs of the beginning of an economic recovery, many small and mid-sized companies are still finding it difficult to meet banks' tightened credit standards. This trend is reinforced by both a recent Greenwich Market Pulse Study as well as recent findings by Barlow Research which found that even though banks have a need to generate more loan relationships, more than 50 percent of small businesses say it is harder to secure credit this year than last. This would be in line with an American Banker study earlier this year that found that close to three-quarters of the U.S. banks had 'significantly tightened' their credit standards.


As a result, many small businesses are using personal savings and credit cards to fund growth. For those small businesses applying for credit, many are asking for unsecured personal lines which usually have tighter credit criteria and a higher likelihood of denial.

This tighter credit market could stifle the growth potential for those firms that could otherwise be well positioned to benefit from and contribute to the economic recovery. In fact, Greenwich Associates consultant Chris McDonnell states that a slight rebound in the perception of credit availability that began last year has now stalled, which could also end up reversing a recent uptick in economic optimism shown by both small and mid-sized businesses.

This lack of credit availability is likely also in part responsible for the lower satisfaction ratings that both large and mid-sized banks are receiving as well as the increasing percentage of firms who state they are looking for a new financial provider or are willing to consider a new provider if a compelling offer can be presented.

For those banks willing and able to lend to both small and mid-sized businesses, there can be a huge 'first mover' opportunity to win a larger share of new business at competitive margins. In addition, with more businesses dissatisfied and in the market for a new financial partner, loyalty to banks that provide funding for growth will be long lasting. This first mover advantage may be short lived, however, as the government may be close to approving a $30 billion small business lending fund which is expected to stimulate the supply of credit.

Is your bank changing their view of small business credit? With so many small businesses looking to potentially change financial institution relationships, how is your bank positioning itself to take advantage of this opportunity?

Generating Loans With Behavior Triggers

While loan business overall is down, the ability to quickly respond to a customer's behavior when they are shopping for a loan can be the difference between expanding a current relationship or potentially losing a customer. 

By leveraging relatively easily accessible credit bureau insight, you can deliver highly relevant communications through multiple channels to generate a steady stream of qualified and ready-to-borrow households.

As the name implies, a loan behavioral trigger lead is created when a customer or prospect is applying for a new loan or is about to refinance an existing loan. Used extensively by the mortgage industry recently due to the large number of households seeking to refinance, triggers also point to households looking for an equity line of credit, new car or even a credit card. 

These loan shopper lists are available on a daily, weekly (1-7 days old) or monthly basis (1-30 days old) and are very time sensitive since the candidate is actively seeking a loan or line of credit. As can be expected, using daily triggers is the most expensive due to both the cost of the list and the cost of daily processing/production, but these lists also produce the best results.

The lists can be customized, allowing a financial institution to select candidates based on filters such as credit score, amount of revolving debt, seasoning, LTV, monthly payment amounts, number of recent inquiries on file or any other criteria desired. Phone numbers can also be appended to the lists for an additional charge. History shows that those households with multiple recent inquiries are better prospects since they are considered 'active shoppers'.

By helping to solve for the mystery of timing, many multichannel loan trigger programs can result in marketing program performance improvement of 5x, 10x or more compared to traditional loan acquisition programs. The challenge for many banks and credit unions is developing an implementation strategy that can process and deliver communications daily and can follow-up on the leads quickly and effectively.

Loan Behavioral Trigger Process

If the program is focused on identifying current customers shopping for a new loan, there is the potential to connect with these households using direct mail, email, digital communications, mobile and a phone call. This integrated cross-channel strategy is the most effective since most institutions don't know which channel(s) their customer is most responsive to. In addition, while a phone call and email are the quickest to implement, the penetration of usable/allowable phone numbers and email addresses is limited.

Some banks reach out multiple times using direct mail and email to ensure they are 'in the mix' when the customer makes a final lending institution decision, while many financial institutions are using their online banking 'offer' pages and even retargeting strategies to keep their message front and center. Due to the time sensitivity, mobile messaging may also be effective if a financial institution has the capability to connect with a customer through texting. In all cases, landing pages are an important component of the communication strategy.

Loan behavioral triggers can also target prospects within a certain geographic area using close to the same strategy. The primary difference is the difficulty in appending as many phone numbers to the files and the hesitation of most organizations to use email for prospecting. Digital communication can still be integrated, however, using advanced geo-targeting techniques combined with SEO tools. With prospecting, integrating a landing page is paramount to success.

The chart below illustrates the potential effectiveness of a behavioral trigger program built by Datamyx, a provider of tri-bureau data for financial institutions. As can be seen the impact of such a program across product lines can be significant.

List Options

All major credit bureaus have the ability to support behaviorally based loan trigger programs and can provide lists on a daily basis. They can also allow your institution to select your candidates based on a wide selection of credit and non-credit attributes. But all credit bureaus are not created equal. Each tend to use different collection, aggregation and reporting strategies and as a result differ on their depth of data for any particular household.

As a result, many of my clients have begun to use multiple bureaus to support their event-based trigger programs. By doing so, greater data can be leveraged for both selection and modeling purposes. In fact, a recent case study by Datamyx found a 70% lift in marketing universe (scalability) as well as a 25% improvement in both response and conversion rates by using three bureaus as opposed to just a single bureau.

Benefit of Tri-Bureau List Sourcing - Datamyx 2012

Creative Messaging

As with any effective direct marketing program, it is important to use creative that clearly states the benefit to the customer as well as how the customer should respond. Since the nature of this marketing communication is in response to a overt customer activity, the communication should be direct with regards to why the customer should include your bank in the competitive set for a new or refinanced loan. If they are a current customer, you should also leverage the power of your relationship with the customer.

All channels should support each other and should provide multiple options for response. A phone number should be provided as well as a landing page where the customer/prospect can initiate the loan application process. Most importantly, since the loan can most likely not be closed online, immediate follow-up by a live representative of the lending area is paramount to the success of the program. Without timely follow-up, the customer/prospect will move to one of the several other alternative organizations that have also reached out to the candidate.

Test and Learn Approach

Behavioral trigger loan marketing requires a 'test and learn' approach to determine the most effective list and channel combinations. This is especially necessary given that the most effective trigger based data is derived from a combination of potentially dozens of credit criteria. The payoff for testing alternative strategies is directly correlated to the level of investment in sourcing, creating, evaluating, testing and modifying trigger criteria over time.

Additional Insight:

Are Your Customers 'Missing in Action' - Datamyx White Paper (2012)

Best Practices for Leveraging Mortgage Acquisition Triggers - Datamyx White Paper (2007)

Implementing Trigger Based Marketing to Drive Customer Loyalty - Genroe White Paper

Six Years of Financial Services Innovation

Anticipation is building as FinovateFall 2013 is returning to Manhattan on September 10 and 11 for the seventh consecutive year. With more than 70 cutting edge firms doing 7 minute demos in front of a sellout crowd of more than 1,000 bankers, investors, analysts and the press, it is the premier showcase and networking event for what is new in the world of fintech.

While the overarching innovation theme remains the same, it is interesting to see the ebbs and flows of presenting categories and companies through the years. It is more interesting to realize how fast things have changed in the financial services industry.

Finovate 2007: When Mobile Was Young

The brainchild of the Online Banking Report and NetBanker blog publisher, Jim Bruene, the very first Finovate conference was held in New York City on October 2 of 2007, when 20 of the most innovative companies in the financial, banking and lending space gathered in front of a handful more than 200 banking executives, analysts, investors and the press to offer a glimpse of the future using the now familiar 7 minute demo format (no PowerPoint slides allowed!). The one-day event was quickly sold out, with overflow space provided for late registrants to view presentations via a video feed (see all 20 videos from the first Finovate conference here).

While only six years ago, a lot has changed in the financial marketplace. In 2007, mobile banking was in its infancy, with just a few hundred thousand users across three different platforms ('mobile website' was the most popular). Interestingly, the discussion at the time was whether mobile banking would be a standalone profit center or just another cost center for banks (still up for debate by many). And despite a lot of hype at the time, only one bank (Citibank) and one vendor (mFoundry) had launched a fully downloadable, custom mobile banking app.

The themes for the 2007 show and number of companies presenting were PFM (5), mobile banking (5), payments/billing(4), P2P Lending (2), online tools (2), mortgage lending (1) and security (1).

The presenter list included (in alphabetical order); Andera, Billeo, CheckFree (acquired by Fiserv), Clairmail, Firethorn (now Qualcomm Retail Solutions), Geezeo, Digital Insight (an Intuit company), Identity Theft 911, iPay Technologies, Jwaala, Lending Club, Metavante (acquired by FIS), mFoundry, Mint, Monitise, MortgageBot (now part of Davis + Henderson), MShift, Online Resources (acquired by ACI Worldwide), Prosper Marketplace and Yodlee.

The Best of Show winners of the first Finovate were a two-week old online personal finance start-up named Mint, a mortgage marketplace from MortgageBot named Marvel and the peer-to-peer lender Prosper. The biggest winner, however, may have been the financial community, since the success of Finovate 2007 was the foundation for a growing series of global Finovate events that now include an expanded 2-day FinovateFall event in Manhattan, a second two-day U.S. event, FinovateSpring in California, a one-day FinovateAsia (30+ firms) and the two-day FinovateEurope (60+ firms).

With technology always at the forefront, Finovate 2007 was the first financial services conference to proactively court the blogging community, with bloggers from four countries covering the 2007 event (live blogging and a ton of tweeting continues during all events). In addition, all of the presentations are streamed for later viewing for attendees and non-attendees on the Finovate web site.

FinovateStartup 2008 - The First West Coast Show

Only three months after the the success of the first Finovate show in NYC, Jim Bruene announced a slightly modified version of Finovate2007 called FinovateStartup to be held in San Francisco in late April of 2008. With a focus on showcasing the hottest financial technology start-ups, the format of 7-minute fast-paced demos remained the same as did the opportunity for the attendees and innovators to network.

With an original goal of securing 20 cutting edge fintech firms for the second Finovate conference, Jim and his team quickly surpassed their goal with a final lineup of 40 startups despite a tightening credit market and bigger financial industry storm clouds on the horizon. Included in this lineup were several firms using this event to introduce new products. (recap of presentations available thanks to Scott Loftesness of Glenbrook Partners with video archives of the presentations provided by Finovate)

Compared to the first event held 6 months prior, the second event's diversity and expansion of themes was apparent, with new savings/checking products, financial comparison tools and investing/asset management being new themes. In addition, while PFM tools still were prominent at the event, security services and investment/asset management firms had greater representation. As can be seen from the word cloud below, the industry still lacked significant mobile/payments discussions.

Riding The Storm Out: Finovate 2009 - 2011

There is not a banker alive who doesn't remember the financial crisis that started in 2007, 'peaked' in 2008, and is with us to a degree still today. Some of the many impacts of this period were that budgets were highly scrutinized and cut, investment in the future was scaled back and innovation at many financial organizations took a back seat . . . except at Finovate. 

While it would have been easy for Jim Bruene and his team to fold up the tent in late 2008 and restart the Finovate concept a few years down the road when times were better, Finovate continued to provide the premier forum for innovation. Despite the economic conditions (or because of it), companies wanting to showcase their new products increased, registrations multiplied and the trade and business press took notice. Maybe it was the ripple effect of the introduction of the first iPhone in 2007 and the rapid increase in acceptance of mobile apps, but interest in financial innovation increased during this difficult period.

During the shows from 2009-2011, innovation trends continued to be in flux (at least if measured by the products being showcased). Some interesting trends included:

• Twelve companies at the 2009 FinovateStartup did demos on PFM solutions (representing close to 25 percent of presenters).
• Small business solutions began to appear in early 2009 and have continued to be a steady category today.
• Search and comparison tools were strong during the period.
• Mobile solutions became the break-out category in late 2009 and early 2010. That trend continued in 2011, with the emergence of mobile photo bill pay and other tools.
• Safety and security tools remained in the spotlight, reflecting the fiscal conservatism that prevailed and the need for safe havens for funds.
• Alt-payments and alt-lending became a more popular category during this period.
• The emergence of real-time information distribution.
• Rewards platforms and savings tools emerged (and won Best of Show honors) beginning in 2011

As the presenting themes continued to grow and change, the interest in financial innovation continued as well. Finovate grew exponentially to meet this need. 

• FinovateFall 2010 was the first two-day event, reflecting the extraordinary desire to both demo and participate in this unique forum. Despite (or possibly because of) this expanded forum, sold out events became the norm.
• The number of demos at the FinovateSpring and FinovateFall events reached more than 60 per show.
• Audiences multiplied from the first Finovate shows, surpassing 800 at FinovateSpring 2011 and reaching 1,000 in NYC for the FinovateFall 2011 show.
• FinovateEurope was introduced, reflecting the worldwide scope of fintech innovation. While being held in London, presenters came from Europe, North America and Asia. The first show had 3 dozen presenters over 400 participants.
• Coverage in both the financial and mainstream business press exploded during this period. In addition, Twitter became an excellent micro blog of highlights as they occurred.
• All demos continued to be catalogued for future viewing on the Finovate site.
• FinovateSpring 2009 (58 presenters)
• FinovateFall 2009 (32 presenters)
• FinovateSpring 2010 (36 presenters)
• FinovateFall 2010 (56 presenters)
• FinovateEurope 2011 (35 presenters)
• FinovateSpring 2011 (64 presenters)
• FinovateFall 2011 (63 presenters)

FinovateSpring and FinovateFall 2012

The Finovate events for 2012 were filled with familiar categories, new subcategories of previous themes, and categories that didn't even exist when Finovate began in 2007. FinovateSpring 2012 highlighted firms presenting payments and rewards platforms, new mobile solutions and the beginning of social media integration. In addition, solutions emerged in response to new government compliance needs as well as in response to the reduction of fee income.

It is amazing how much change can occur with innovation themes in six short months. Possibly because of rapid changes in the acceptance of mobile devices and related apps, the increased concern around authentication and security, the beginning of marketing's emergence from the financial crisis of 4-5 years prior, and the slow acceptance of certain innovations by the public and financial institutions, the word cloud of FinovateFall 2012 themes looks nothing like the themes of the Spring.

Not only have the themes continued to change, the subcategorization also illustrates the micro segmentation of new solutions.

My First Finovate: FinovateSpring 2013

FinovateSpring 2013 was the first Finovate that I attended in person (previously, I live vicariously through others by following the live blogging and twitter mentions). As has become the norm, the event was again sold out, and you could feel the energy upon entering the venue (see my recap 'Musings of a Finovate Virgin). It also had the feeling of a class reunion since, while presenters may come and go, those who attend the event try to make it every year.

As was true with the themes in 2012, the changes in key categories seemed to evolve based on consumer demand (security services, small business), new tools and visualizations (wealth management, investing and mobile applications), new segments (underbanked) and even some advanced applications (P2P lending and B2B payments). 

Most interestingly was the emergence of so many crowdfunding solutions compared to previous shows and the disappearance of PFM in the traditional sense. As could be expected, the categories of mobile, payments and security/authentication solutions remained strong.

FinovateFall 2013: Fintech Innovation is Alive and Well

With FinovateFall 2013 a week away, there is no doubt that innovation in financial services continues unabated. Finovate will have another sell out crowd in Manhattan on September 10-11, and there will be another exciting roster of 60+ companies ready to demo their solutions.

While some may have a strong business case and a pent up demand for their solution, others may be trying to 'make a market' for their innovation. Some are hoping that their demo will spur new funding for their innovation, while others are extending a product category by an established vendor.

As in the past, there will be more than 1,000 registrants who will cast their ballots for their favorite presentation, naming them 'Best of Show'. Some of the votes will be cast based on presentation style. Others will be cast based on the 'cool factor' (which doesn't always reflect a desire or need to buy). Still others will cast their ballot based on which solutions they believe have a valid chance in the marketplace.

The networking will be one of the primary side benefits with end of day cocktails and even the introduction of the Bank Innovators Council on the Monday evening before the FinovateFall 2013 kickoff.

No matter the outcome of the voting, the diversity of innovation is broad and the excitement in the industry is strong. Innovation is a differentiator in an industry that often feels 'me too'. It is a way to potentially grow market share, retain current customers, cut costs and/or increase revenue. 

Innovation is risky but necessary. It is exciting yet frustrating. It is not for the faint of heart, yet it builds corporate character. Fintech innovation is, by definition, the future. And based on the themes for FinovateFall 2013, innovation is as different from six months ago as it will be six months from now . . . and yet many of the themes sound familiar.

While mobile, security, small business, lending and payments remain strong themes, the underbanked category all but disappears. In addition, we see the somewhat surprising reemergence of PFM and loyalty/rewards (maybe there really is something new in these spaces) at the same time that mobile wallets and customer experience get zero love.

As Bradley Leimer stated upon returning from his first Finovate . . . It is the 'The Disneyland of Fintech'™. For those attending or joining the event through social media, Finovate is definitely an 'E-Ticket' ride to the future.

Additional Resources

Finovate 'Best of Show' Winners 2007 - 2011

FinovateSpring 2012 'Best of Show' Winners

FinovateSpring 2012 Twitter Transcript

FinovateFall 2012 'Best of Show' Winners

FinovateFall 2012 Twitter Transcript

FinovateEurope 2012 Presentations (35 presenters)

FinovateAsia 2012 Presentations (35 presenters)

FinovateEurope 2013 Presentations (64 presenters)

FinovateSpring 2013 'Best of Show' Winners

FinovateSpring 2013 as Seen Through Twitter

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