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Prediction #1 – Competition for Core Deposits will get Tougher

Over the last few years, focus on growing core deposits waned at many community banks and credit unions. Those institutions that consistently marketed for deposit accounts during this time found easy success and an increase in ROI for their marketing dollar. Nevertheless, many financial institutions were happy with the organic inflow of deposits without utilizing resources and achieved growth as well.

Two major influences were in effect during this time that amplified the inflow of deposit accounts: first, there was increased checking transition when many big bank institutions implemented fees on previously free checking accounts. For community banks and credit unions, this created a steady rise in new core deposit accounts. Second, low-interest rates and economic uncertainty drove consumers to bank more of their dollars in deposit accounts – leading to an increase in average balances across the board.

Economic cycles typically, well…cycle. When interest rates start to rise (as predicted for next year), expect average deposit balances to decrease or flatline as more attractive offers for those dollars increase – meaning fewer deposits to lend. Also, expect fewer new deposit account openings as competition for primary relationships increase as well. These changes will result in a bigger need for low-cost deposit dollars to maintain healthy lending activity.

To summarize, fewer deposit dollars and deposit accounts will mean more competition for financial institutions. Heading into 2018, an aggressive deposit marketing approach will be your best defense against an increasing loan-to-deposit ratio, and your best offense at gaining new deposits.

Prediction #2 – A New Generation on the Horizon

Be prepared to hear a lot more about Gen Z, the next generation following Millennials. Frequently described as the “Digital Generation,” this group currently falls between the ages of 14 – 21, though that range will likely broaden over the coming years.

Gen Z represents the children of the second depression and are generally much more fiscally conservative, already worried about finances, and averse to taking on the same amount of debt as the previous generation. Seeing firsthand the struggles Millennials face from college tuition debt and poor spending habits has made an impact. You may find this generation living in their parent’s basement (perhaps, as long as the average Millennial) to save money for retirement or a down payment on a house – not as a necessity from debt.

Pay-as-you-go college educations may be on the rise, meaning, more working hours versus number of classes each semester. ‘Full time’ student status might become the exception more than the rule for many without an academic or athletic scholarship. This trend could also provide Gen Z with a balance between earning your degree and gaining valuable real-world experience, along with the bonus of minimizing college tuition debt. Yes, Gen Z has observed many Millennials with costly degrees both underemployed or unemployed post-graduation.

In a recent Financial Brand article, several studies on Gen Z revealed some telling facts about this group1:

  • 72% have a checking or savings account
  • 48% have some type of financial app on their cell phone
  • 21% had a savings account before the age of 10
  • 12% claim they have started saving for retirement already

The main thing to keep in mind as a bank marketer – Gen Z is very different than Millennials. They are likely to engage more with brands they believe are real, transparent, and trustworthy. Your financial institution will stand out if you are “genuine” and not just the “next best app” available.

Most importantly, long term loyalty will be rewarded to brands that earn it. And, it may not be too early to start earning it with Gen Z.

Prediction #3 – It’s GAME ON when it comes to Competing Online

A year ago, there was a lot of apprehension about how successful community banks and credit unions could be competing online. Going into 2018, we still see many of those institutions behind the curve when it comes to their online presence, digital advertising and social media marketing.

Online platforms can be your best resource (or biggest resource zapper if you try to mimic what the big banks are doing online). For your financial institution to thrive, 2018 is the year to find the right mix between online and traditional marketing opportunities.

Let’s start with digital advertising. Large institutions have significant dollars to compete online; but keep this in mind, smaller institutions have the upper hand in a few meaningful ways. Big banks must deal with many markets, and a major advantage exists in not needing to spend marketing dollars to compete on a multi-state or national level. Community-based institutions can get around big bank budgets by being smarter in their local markets when it comes to digital advertising.

Take for example: Google Adwords. If you are a small to medium-sized financial institution in Charlotte, NC trying to advertise for competitive keyword searches, the bigger guys are most likely to win top spots. Your institution may not be able or willing to pay to advertise on Google for every likely search, and nor would that be wise. Here is what pops up when searching for “NC Charlotte Checking Accounts” as I write this article:

  • 1st paid ad: Wells Fargo
  • 2nd paid ad: Bank of the West
  • 3rd paid ad: TD Bank
  • 4th paid ad: Navy Federal Credit Union

As expected, no ads from community banks or locally-based credit unions show up on page one of that keyword search. Something not expected was that neither Bank of America or BB&T had ranking ads. It was interesting to see Navy Federal Credit Union in 4th place (although not technically a big “bank,” they are the biggest credit union in the U.S.).

As a side note2: With corporate headquarters in the Charlotte MSA, Bank of America holds the top spot for deposit market share by a big margin – almost 75% – with Wells Fargo and BB&T rounding out the top three. However, as far as total number of offices in that MSA, both Wells Fargo (92 offices) and BB&T (71 offices) beat out Bank of America (61 offices).

Once you scroll past the ads, BB&T is the first organic, non-paid bank listed for that keyword search…which may be, arguably, more important than ad rankings. This is what we call SEO, or Search Engine Optimization. To improve your organic online search ranking, consider your website’s copy and content, frequency of updates and check each of your website pages to see if they have meta tags and keywords working for you behind the scene to optimize online searches. SEO allows you to compete for higher organic search rankings without spending additional advertising dollars.

To be fair to Google Adwords – it can be a great online advertising tool. It may not be the best platform if you try to compete head-to-head with the big banks or the big credit unions, but it can work. The good news is – it is only one of the many options now available to advertise your institution’s online presence, products and services.

A part of your online marketing mix should be ads advertising new capabilities, opening new deposit accounts and loans, as well as building brand awareness. Equally important for your online strategy is building your presence with organic postings on social platforms. Facebook, Instagram, Twitter and LinkedIn are likely the social platforms that come to mind first. And, for now, arguably the most relevant for financial institutions.

A general rule of thumb: for every “ad” highlighting a specific product or service offer, try to feature 7 – 10 organic posts on social platforms. Here are a few suggested ideas for organic posts:

  • Important anniversaries and milestones at your institution
  • Highlight volunteer work, fundraisers, community sponsored events
  • Athletic sponsorships or academic scholarships
  • New branch or remodel grand openings
  • Recent promotions or employment opportunities
  • Client testimonials and personal banking stories
  • Commercial client business spotlights
  • Educational features about banking products or services

Basically, anything that matters to your community and the people that bank with you will result in successful organic posts.

You will likely earn bonus points for keeping it creative, fun, and humorous when appropriate. Ask yourself – what would I share on Facebook versus Twitter versus LinkedIn? Depending on your platform, cute pics of animals and kids are big Facebook winners (is it working with the images in this article?) whereas that may not be appropriate on LinkedIn when your commercial team is trying to attract high-end business opportunities. Regardless of platform, images are important, telling, and grab attention, so give that as much thought as copy and content.

Social platforms thrive on community involvement, personal stories and local relevance, something that community-based financial institutions naturally excel at in their markets. There is a lot of opportunity online with digital advertising and social media marketing if approached strategically. If your institution feels as if it can’t compete against the big banks, keep trying to find the right mix for your market between your online presence (website, digital advertising and social media marketing) and traditional marketing. 2018 is the year where community banks and credit unions can’t afford to be left behind.

Jennifer Brooks has over 20 years in the financial marketing industry. She is Chief Marketing Officer at Stellar Strategic Group, LLC. To learn more about digital marketing, please contact  or  402-281-0692.

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