In a recent issue of Advertising Age, Anne Finucane, global strategy and marketing officer for Bank of America discussed how BofA is managing changing customer needs and attitudes toward banks. In the article Finucane acknowledges that the economic meltdown resulted in a large loss of trust in the banking industry. She is using Bank of America's vast marketing and PR resources to bridge that gap and to meet the changing needs of consumers.
If you break it down, BofA's strategy sounds less like the old big bank bluster and more like a credit union. They are focused on demonstrating financial responsibility, showing more corporate social responsibility, and responding to customer desires to better understand their own finances. BofA is simplifying complex processes by creating short, simple documents for mortgages and other products and services. Sound familiar?
Unrestricted free checking is disappearing fast from major banks, including BofA. In its place is a stepped-up push toward relationship marketing. The more business you do with the bank, the less you're charged for services. Checking becomes free to the customer who meets requirements such as direct deposit plus minimum loan balances. That means more competition for each financial service product and service.
Our world has changed. A low rate and fee story aren't enough in a time of record low rates for both loan and investment products. CUs must create differentiation by exceeding member expectations for service and delivery and keeping products and services as affordable as possible.
The elusive "younger market" that all financial institutions are chasing after is already weighed down by big debt. Outstanding student loan debt just outpaced overall credit card debt for the first time. And many students with loans have significant credit card debt, too. Their debt load means buying homes will be more difficult. And after watching the real estate crash coincide with massive job losses there is speculation this younger generation will not be an interested in home ownership. They may have the respect for thrift that characterized the depression era generations instead of the buy now, pay later attitudes of their parents. Financial services providers must tap into these evolving needs and attitudes.
When dollars are tight it's tempting to steal from marketing budgets to feed the bottom line. And right now many credit unions don't want assets and some can't figure out how to lend out what they have. But failure to market successfully or pulling back on core loan promotions because of budgetary concerns is a potentially fatal mistake, and it's guaranteed to be an expensive misstep. While your marketing back is turned your members will be exploring options elsewhere. It will cost a lot more to get back on track and take longer than to continue to build relationships with current members and attracting new members through current marketing.
It's time for the credit unions to become more competitive and sophisticated in their efforts to win market share away from banks. The anger and distrust of banks that followed the economic meltdown is dissipating. Banks are repositioning themselves to regain consumer trust. The window of opportunity for credit unions to convert casual members to become their primary financial services provider is slowly closing. As your credit union budgets for 2011 it's time to put your resources to work building the future of your credit union.