Capital One Continues to Innovate

Historically an aggressive marketer and innovator in the credit card industry, Captital One has expanded its reach in recent years, using their growing banking franchise as the foundation for introducing innovative banking products. In addition to having a relatively rich debit rewards program and expanding into online and small business banking, they have recently introduced a new savings product called "InterestPlus Online Savings".

The saving program offers an above market interest rate on balances over $2,500 in addition to a 10% quarterly interest bonus payment paid if the customer uses their Capital One credit card once a month.
The bonus can also be earned if the customer maintains a minimum balance of $15,000 each month. The bonus for using the credit card is similar to other promotions done by Captial One in the past 12-18 months to cross-sell services and relationships off their credit card foundation.

The promotion of the new service began in December of last year through the bank's web site, statement inserts, direct mail and with email according to Comperemedia. Using strong visual elements such as comparative bar graphs and icon buttons similar to what I have seen with ING mailings, it is clear that Capital One plans to leverage their strong marketing talents from the credit card industry in building a strong bank brand.

Segment Your Customer Base For Reg E Communications

The recent changes to Reg. E, impacting how financial institutions can levy fees for overdrafts caused by one time debit card or ATM transaction, have created a period of both challenge and opportunity for financial institutions. Due to the almost certain negative impact on a bank’s fee revenue and potential customer confusion about this new regulation, it is important to be able to effectively and efficiently implement these new requirements, maximizing account holder opt-in responses while providing a positive customer experience.

In this month's ABA Bank Marketing Magazine, Robert Giltner from Velocity Solutions suggests that financial institutions should start their communications process with a mass mail and email campaign to all customers explaining the new regulation. While I agree that all customers should be provided a clear understanding of their options, I don't agree that an all encompassing direct mailing should be done from a cost perspective.

Every customer should not be treated the same. Research shows that while most customers do not like the fees associated with overdrafts, there is a percentage that rely on overdraft coverage to meet current expenses or avoid embarrassment caused by inadequate record-keeping. To achieve the highest possible opt-in response at the lowest possible cost, I believe a segmented and integrated communications process should be used, leveraging multiple communication and response channels and focusing resources where they will have the greatest impact.

Instead of treating all account holders the same, most financial institutions I have talked to will be communicating most aggressively to the 10-15% of the customers who have the highest incidence of overdrafts, connecting with those households that the FDIC found to be the highest users (and fee generators) in their 2008 Study of Bank Overdraft Programs.

Some firms are even trying to determine which owner on an account is responsible for the majority of the overdrafts. By using all available communication channels (direct mail, statement inserts, email, POS, phone, and branch level communication), banks are hoping to communicate the benefits of opting-in to the customer, thereby minimizing the fee income impact of the regulation while improving the customer experience. The majority of the customers who do not overdraft their accounts will be more efficiently reached using a series of statement inserts, statement messages, branch level POS, ATM messaging, email, etc as opposed to postal mail.

I believe the most difficult challenge may be after the regulation takes effect in August, when customers who were not frequent overdrafters experience their first rejected ATM transaction or debit card purchase.

Reg E Opt In Results Better Than Expected

As I travel across the country and talk to bankers about their early Reg E opt-in results, many are experiencing significantly higher than expected acceptance rates. In fact, some banks have indicated that they have achieved opt-in rates of as high as 85% or more from the highest impacted segments (those who have the highest use of overdraft coverage) and more than 95% from new customers who are opening a new account.

This level of acceptance should provide some comfort to financial institutions who have been concerned about a massive outflow of fee income as a result of Reg E beginning on August 15. Alternatively, this level of opt in sets the bar rather high for those organizations who have either not begun their Reg E communication or had thrown in the towel expecting customers to opt out on a massive basis.


In talking to those bankers who have achieved best-in-class results, here are the consistent strategies for success:

• Connect with customers using as many channels as possible - While response to statement inserts, direct mail and ATMs has not been as strong as the outbound telephone, 1:1 branch contact and email channel, the most successful banks have used all channels to provide a clear understanding of the regulation and to generate response.
• Use all outbound phone capabilities available - When a direct connection is made with a customer discussing the option of 'keeping their coverage the same' and 'having the assurance of no surprises', success rates have approached 90+%. Banks are using all of the resources possible to make these calls, including branch call nights, outsourced providers and leveraging inbound call resources.
• Expand communication beyond high opportunity segments - Instead of only connecting with high OD households, the most successful organizations are reaching out to all of their customers regarding opting in. While not having the same immediate financial impact, this communication emphasis will avoid potential negative customer experiences in the future.

As a result of the strong results achieved to date by those banks who started early, most of the financial institutions I have talked to have communication strategies that extend well beyond August 15. While the regulation takes effect on that date, most banks are going to continue mailing and call efforts until they have reached as many households as possible. Obviously, knowing that an 80+% acceptance rate is possible provides the financial incentive to not approach this effort casually.

9 Ways Marketing Can Help Acquire New Mobile Banking Customers

At a time when battle lines are being drawn in both the mobile banking and payments space, it is more important than ever to encourage customers to use the mobile channel.

According to research conducted by Fiserv Inc., organizations that actively market mobile banking have experienced an average adoption rate that is twice as high as institutions that did not promote the service.

So, how can financial marketers use the multiple communication channels at their disposal to promote channel migration? How do we encourage both the sign-up and utilization of the mobile channel that can help reduce costs and potentially generate revenue (see 'Monetizing Mobile Banking', Oct. 15, 2012). Below are nine ways institutions I am familiar with are promoting mobile banking.

• ATMs: One of the best ways I have seen mobile banking promoted was by Fifth Third Bank. Not only did they encourage sign-up for mobile banking on the ATM screen as many banks do, but they also included a QR code at the bottom of their transaction receipt. The use of a QR code appeals to the more advanced smartphone user while being a perfect way to electronically link to the appropriate app. The customer may decide to scan the code immediately or do so later when they reference the receipt to balance their account.

• Account Statements: Another very inexpensive, yet effective method of promoting mobile banking using QR codes in on customer statements or on the envelopes of standard customer communication. Chase bank does this very effectively, automatically directing customers to the correct app store for their device. In addition, statement inserts are a low-cost way to reinforce statement messages or branch promotions as done by SunTrust.

• Branch Communication: There are obviously many ways to promote the download of a mobile banking app in a branch as well as many ways to offer incentives to either the customer and/or branch employees for the completion of a download. The benefit of any branch-based promotion is the ability to have dialogue with the customer around the advantages of using mobile banking as well as providing a great opportunity to answer any questions or address any concerns the customer may have. Since customers almost always have their phone with them when visiting a branch, this is another channel where QR codes can be very effective, especially on brach POS materials and transaction receipts.
  
  
• Email: An email campaign is a great way to target online banking customers or customers doing a large number of balance inquiries monthly. Some banks are even targeting customers who use the branch extensively for check deposits, promoting the remote deposit capture function of mobile banking. The key with any email campaign, however, is providing a direct linkage to either the mobile banking location on your web site or to the mobile banking application itself.

• Web Banner: Using banner advertising as well as adding pop-up banners when customers are viewing your web site using their mobile device is a highly effective targeting technique that can promote your mobile banking application. With banners, various tests can be done at a relatively low cost, with learnings applied to more expensive channels such as direct mail. As with most other electronic and digital marketing, it is important to provide a link to either a mobile banking landing page or to the appropriate mobile banking app. Recently, most banner ads focus on the benefits of mobile check deposit as done by Citi below.

• Direct Mail: With the vast expansion of smartphone ownership and the potential economic and competitive benefits of mobile banking migration, several banks are using direct mail as part of a multichannel strategy to increase mobile banking penetration and usage. While more costly than many of the channels above, the lift from adding targeted direct mail to the marketing mix has offset the higher costs of this channel, increasing the net volume of qualified users faster than direct mail or electronic channels alone.

• Social Media: Don't forget fans and followers when you are building a mobile banking marketing strategy. Avid social network users are some of the most prolific smartphone users, making them a great target audience for the benefits of mobile banking. Make sure your Facebook and other social pages are optimized for mobile viewing and they include easy links to your mobile banking application jump pages or the correct app store.

• Traditional Media: While not used as extensively as other channels, traditional print advertisements are still used to reinforce the benefits of banking via the mobile channel. Usually focussing on mobile check deposit, mobile rewards programs or new applications such as an ATM finder, this channel is an effective way to display market leadership in mobile banking.

• SMS Text: More and more financial institutions are beginning to ask for mobile phone numbers as part of the new account opening process to enable better communication with customers. If you have SMS permission, this channel can be effective when used with an incentive for mobile banking sign-up along with a direct link to the download page in the app store. While this channel needs to be used judiciously, there is also the ability to integrate the message with your bank's rewards program offer of points or discounts on merchandise.

Integrate Mobile Banking Message Now

A recent Juniper Research report entitled 'Mobile Banking: Handset and Tablet Market Strategies 2013-2017', finds that mobile banking is expected to grow at a compound annual rate of 18 percent to eventually reach one billion consumers in the next five years. This growth is being supported by many of the major banks increasing their investment in the mobile channel and by significant promotion of mobile banking through various media. As a result, it is more important than ever for every financial institution to grab their share of the mobile banking pie before it is too late.

According to Steve Shaw, vice president of Strategic Marketing, Digital Channels and Electronic Payments for Fiserv, "The focus of marketing mobile banking should be on educating the customers. If customers understand how they can benefit from the service and how to get started, the convenience will compel them to extend the relationship with their financial institution through their favorite devices."

As you acquire new mobile banking customers, it is also easier to extend the collection of insight from the customer such as their email address (if you don't already have a current address) and even their Facebook page or Twitter handle. The more data you have, the easier it will be to expand communication through additional channels. This can also be done at the point of sale as branch personnel are signing customers up for mobile banking.

Are there any other successful ways to market mobile banking that I missed? Are you using all of the channels possible to migrate transactions and inquiries to your customer's mobile devices? 

Let me know.