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Bank Marketers Face Challenging Times With Great Opportunity

After two years of responding to government intervention into the revenue structure of financial organizations, bank marketers are now faced with heightened levels of competition, a more demanding customer base, an unfavorable rate environment and, in many cases, a shrinking budget. But potentially most challenging to financial institution CMOs I meet in my travels is the ability to respond to the shift in the ways we interact with customers and prospects. 

The flood of data, channels, devices and changing consumption patterns have marketing departments in financial organizations of all sizes trying to determine if they are prepared. They are reviewing the skills sets that will be required to take advantage of the opportunities these challenges present, and realizing that gearing up may require a heightened level of personal engagement from all members of their team. 

These challenges are reinforced by a set of studies that I recently reviewed that surveyed marketers from all industries. IBM's 2011 Global Chief Marketing Officer Study entitled, From Stretched to Strengthened found that the majority of CMOs feel unprepared when it comes to the explosion of data available (71%), the impact of social media (68%) the growth of channels and devices (64.5%) and the movement from mass markets to micro markets (64.5%). 

More importantly, several of the areas where CMOs stated they were least prepared were also those they believed would be the most important for their businesses. In fact, each of the top four areas of preparedness gap are also in the areas where the impact on the marketing function was thought to be the highest. 

But while there were many references to the growing analytical side of online measurement and monitoring in the IBM study, only 26% of CMOs surveyed track blogs, 42% track third-party reviews and 48% track consumer reviews. The need for a much better understanding of ROI was referred to many times in the study, going as far as saying that the CMO of today is in position similar to that of the CFOs 10 years ago. 

Turning data into action was also the primary organizational issue in Unica's Annual Survey of Marketers, with the need to harness the power of the mobile device and to leverage the potential of truly integrated marketing also ranking high. As with the IBM study, the Unica research indicated that there is a significant gap between desire and achievement, with much more progress needed in the use of insight for better customer communication and measuring the impact of efforts across channels. 

What was interesting about the Unica study was that, while social media definitely registered as the champion of emerging channels in terms of use (53%), the enthusiasm for the channel was less than in recent years, possibly signaling the desire to see more tangible results from efforts. This also seems to be true in the bank marketing industry, where many are questioning the financial impact of investments made in social media and wanting to connect 'fans' and 'follows' into leads and sales. 

Just like most other industries, bank marketers are being tested daily during a period of unparalleled change and will be required to respond to these new market realities:

  • The consumer is definitely in control of the business relationship, with the ability to shop with a click and change bank partners without ever confronting us face-to-face.
  • While margins are thin and the tolerance for fees is low, delivering customer value is the table stake in the game both from a perspective of products offered as well as access afforded.
  • There is a greater need for seamless integration of marketing channels with an eye towards both effectiveness and efficiency.
  • Accountability for marketing investments has never been more important at a time when bank revenues are at a premium, with new tools for measurement and skills for assessment being leveraged.
  • Each of the above realities will require a more robust and continuous level of testing as tools, approaches and consumer attitudes continue to change.

At the National Center for Database Marketing Conference last December, where hundreds of practitioners met to discuss current trends and share success stories from a variety of industries, one thing was clear . . . there is no silver bullet. In fact, most marketers are working hard to hone their skill sets in a very fluid environment. 

The good news is that there are amazing solutions being developed daily to help marketers do their jobs more effectively. The bad news is that the change is continuing at a more rapid pace every day. To be effective, bank marketers will need to have both great learning agility and adaptability to 'what's next'. 

What do you see as the biggest challenge facing your marketing department in the coming year? Is your team prepared for the changes ahead? What are you doing to prepare for the new marketplace? 

I would love to hear your comments.

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Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 January, 2012, 10:11Be the first to give this comment the thumbs up 0 likes

Exploiting data explosion, social media and new channels / devices will call for heavy IT investments. Given that financial services IT is driven largely by operations in most FIs, it is not surprising that CMOs find themselves incapable of turning these 21st century blips in their radar to competitive advantage and additional sources of revenues. A recent Gartner report predicts that CMOs will have a bigger IT budget than CIOs in the next 3-4 years. If and when that happens, marketing departments will be able to acquire the next level of capability. 

Brett King
Brett King - Moven - New York 17 January, 2012, 14:35Be the first to give this comment the thumbs up 0 likes

The fact is that despite the comments of doubters, there are already major shifts in approaches to bank marketing taking place right now. Take the example of Commonwealth Bank in Australia with their recent hire of Andy Lark, or RBS in the UK with their hire of Chris Popple. The smart money is on digital at the core today.

If you're not looking at major digital plays within the marketing team in the last couple of years, then you're already taking a hit on acquisition and ROMI (Return-on-Marketing-Investment) performance.

Probably 50% of the traditional marketing department is at threat right now due to this change in engagement models. And the cost? Can you really afford to keep putting ads in newspapers that no one is reading, or blasting out millions of DM campaigns that get infinitesimal response rates, or on TVCs that your target audience is fast forwarding on their DVRs? 

The facts are that in an environment where customer behavior changes as rapidly as it does today, we can't expect bank marketing to be stagnant and produce the same results. Sure, it is a ongoing project, but sitting back and waiting for 3-4 years before you start is a disasterous strategy.

 

Jim Marous

Jim Marous

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The Financial Brand

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08 Jan 2012

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Cleveland

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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