A win for the little guy

The Federal Government’s move to guarantee all Australian bank deposits has been generally welcomed by the industry, with many commentators arguing it was needed to avoid a run on an Australian bank.

The guarantee is certainly good news for Australia’s second tier and mutual financial institutions which had been subjected to increased questioning from customers on their credit ratings and overall stability.

Despite credit unions and building societies falling under the same regulatory regime as their larger bank competitors, many consumers were under the false impression these institutions were less secure and that deposits with the major banks were explicitly protected.

The guarantee puts all ADIs on a level playing field and there’s even the chance it could save Suncorp from being eaten up by one of the big four, which would ultimately be a win for competition and consumers.

Credit unions have been telling Online Banking Review for some time that they are being questioned by customers seeking to know their credit rating, usually as a result of bank branch staff hoping to deter them from moving their funds to a competitor.

Credit ratings were not even on the radar of consumers shopping around for savings products until the credit crunch emerged and direct bank RaboPlus started marketing itself as “Australia’s safest bank”.

Until recently the Australian Bankers’ Association had always opposed deposit insurance, arguing it was costly and problematic, most likely because of the moral hazard issues it presents. Ultimately it means all financial institutions will come under increased scrutiny with regulators looking more closely into their investment practices.

So it will be interesting to see if any of the big 4 banks start using the guarantee as a marketing tool.

Following feedback from customers, RaboPlus moved quickly to add information about the guarantee to its site – nothing like a big red “guaranteed’ stamp to instill confidence.

High interest savings, term deposits, managed funds, online investments from RaboPlus via kwout

The Commonwealth Bank continues to heavily promote its “Determined to be strong in volatile times” brand messaging, but a quick glance of all the major bank’s websites shows no obvious references to the Government guarantee.

NAB’s new direct banking arm UBank has not added any reference to the guarantee, referring instead to the strength and “global capability” of its parent.

UBank - A good place for money - Backed by NAB. A direct bank with term deposit via kwout

mecu, one of the only Australian credit unions to have a credit rating, has added a fact sheet to it’s site (in their haste they spelt Government incorrectly), something likely to be replicated by more institutions in coming days.

Goverment Deposit Guarantee - Fact Sheet via kwout

Update: Citibank has also added a banner to its home page:

Citibank Australia via kwout

Marketing the Wesabe way

Wesabe is one of the few finance-related companies which seems to truly understand the role of social media marketing to building a brand. Which is why I asked Wesabe VP of marketing Gabriel Griego to speak at last month's Innovative Marketing of Financial Services forum.

Gabe was kind enough to Skype in for questions after the presentation. No mean feat, given he was on holidays in Nicaragua at the time.

It turns out Gabe simply believes in using new media techniques to conduct traditional marketing, as you'll see from this 15 minute video.

Wesabe makes a genuine effort to engage with bloggers, uses Twitter to announce and get feedback on upgrades to its service and, as James Gardner put it so aptly, engages in "community management" rather than PR.

If it sounds like I've drunk the Kool-Aid, it's because I find this quite rare. As an Australian-based journalist covering banking innovation I spend most of my time seeking innovation, searching for examples that stand out, and then trying to convince those involved to speak about it.

Perhaps it's because bankers generally fear failure that they are hesitant to promote new things before they're cemented in the day-to-day. Or maybe they define innovation differently to me.

At last month's innovative marketing forum we had an interesting panel discussion about innovation. Commonwealth Bank GM of digital marketing Trent Moy made the point that people looking at innovation often get caught up in the "shiny new things" as opposed to structural or systems innovation that can actually deliver better results to the bottom line.

This is true, but equally damaging is a hesitance to even consider a new thing before three of your competitors are using it and customers are asking why you're not there yet.

Let's debate innovation in Australian bank marketing

What’s more important in the current climate: Sticking to traditional messages that promote trust in your brand, or embracing innovative Web 2.0 marketing efforts? Can financial services marketers do both?

This is just one of the issues participants will be debating at this year’s Online Banking Review Marketing forum coming up in Sydney on August 28.

Ahead of the forum we’d like to open up the discussion to our audience. We'd love to hear your opinion on the current state of affairs in financial services marketing.

Is the current culture of online participation causing damage to bank brands?

Should marketers be re-directing the money they spend on TV campaigns to building better products & services that will then be spread via online networks?

How can financial services marketers get away from the current price-driven focus of online marketing activity?

Are we getting closer to the death of the campaign where activity is ongoing and integrated campaigns are less important?

We’ll be discussing these issues in more depth when we break for an interactive roundtable session being led by Hitwise analyst Sandra Hanchard at the forum.

Register for the forum before July 31 and you can take-advantage of our early-bird offer to bring a colleague for free. This offer will end on July 31, so let your colleagues/clients know about it today.

Speakers are already confirmed from Forrester Research, HSBC, Google, Ideal Interfaces, Commonwealth Bank, RaboPlus, and Citibank, with more to come.

I look forward to continuing the conversation..

Merger madness grips banking industry

I received one of those outbound sales calls from a bank last week. Thanks to its apparently sophisticated CRM system, NAB has built a reputation for leading the pack at this.

To give NAB due credit the call was well-timed, but I was quite surprised by the sales tactics of the caller in trying to get me to switch part of my business banking from Westpac to NAB.

On hearing I was with Westpac the caller commented along the lines of “You don’t really know what’s happening with Westpac – with this St George merger who knows what could change.”

It certainly got me thinking – how many sales people and relationship managers are busy telling Westpac/St George clients now is the time to jump ship?

Mergers are certainly a distraction, and if handled poorly can lead to a mass defection of customers. Which is why Gail Kelly has been busy encouraging customers to write to her personal email address with their concerns and feedback. (Thanks to burningpants for the pic)

Personally I’d rather see this type of communication out in the open. Maybe its time Gail Kelly started blogging. At the very least I think customer survey submissions to the ACCC’s review of the merger should be made public.

NAB is rumoured to be considering a counter-bid for St George. If this is the case then the marketing and PR teams should already be working on the communication plan. That would make my sales caller look as if he was sitting in a glass house throwing stones.

Bank marketers need to consider what sort of message they want to be sending consumers about mergers. On the one hand we have senior NAB executives pushing for a removal of the four pillars policy, and on the other sales staff that won’t hesitate to tell customers mergers are bad for them.

It's a classic case of banks failing to serve two masters - shareholders and customers. Is it any surprise customers view all of the big 5 banks as the same?

Why do bankers persist in selling price online?

Few bank marketers will tell you price is the most important selling point, yet that’s precisely what gets marketed online, says NAB chief marketing officer Howard Silby.

Speaking alongside a panel of his peers at last week’s CMO forum, Silby argued most financial services marketing is still “very Web 1.0”. “It’s department store type marketing – there’s a lot of display or banner advertising, and that actually reinforces the point that you can easily price shop online.”

Silby says: “What the industry hasn’t cracked is a genuinely interesting or differentiated brand experience online”.

He was responding to comments from Mark Buckman, the marketer behind the Commonwealth Bank’s controversial Goodby Silverstein-produced TV campaign.

Buckman argued industry thinking has gone beyond “Web point two” to what he labeled “Web point three”: “So using things like artificial intelligence and contextual searching to actually build a more dynamic experience for customers.”

Silby was not convinced, telling Buckman “I really have no idea what Web 3.0 or ‘point three’ is, so I’m looking forward to Mark telling me about that.”

I’m inclined to agree with Silby. There are very few examples of Australian banks embracing Web 2.0 tools for marketing purposes, and most that do exist are the work of institutions other than the Big Four.

The Commonwealth Bank’s local business banking community is a step in the right direction, but a far cry from what the bank could produce if it devoted more time and money to Web 2.0 initiatives.

ANZ’s head of cards marketing Paul Riley agrees bank marketers should be thinking about how to move away from discussing price online. “I think the ability to talk about your brand online, outside of price, will give some banks more of an advantage in the future.”

Silby says one way to do this is with more involvement in communities that are discussing financial services online. “There are not really any great examples here, but there are in the US. Wesabe is an interesting one.”

Wesabe is yet to determine whether it will offer contextual search alongside its discussion groups – to date it has avoided any form of advertising.

It seems just a matter of time before an Australian entrepreneur meets the challenge of combining product and price information with consumer generated content and discussion groups that banks can participate in.

What do you think?

Is bank TV advertising a waste of time?

“Why is any bank these days spending millions of dollars on creating TV ads?” columnist Simon van Wyk controversially asks in tomorrow’s edition of Online Banking Review.

This is something the panelists on last night’s episode of The Gruen Transfer touched on when they analysed the latest set of bank advertisements. You can download the transcript here.

DDB creative director Matt Eastwood agreed advertising a bank is a challenge and that “The problem with a lot of them is that they try to make you love them and it’s never going to happen”.

Van Wyk argues banks should be taking a leaf from the books of the new crop of agile, web-based financial services companies like Wesabe, Mint, Prosper and Zopa – all of which make it easy for people to deal with them, and provide a valuable experience.

He says it’s time bank marketers concentrated on creating value by launching innovative products and services that can be spread via networks, rather than just delivering advertising messages.

Both van Wyk and the Gruen Transfer panelists use the Commonwealth Bank’s most recent “Determined to be Different” campaign as an example.

The question is: Did the campaign work?

CBA marketing director Mark Buckman certainly thinks it did, telling The Australian the campaign had contributed to the bank’s recent 0.34 per cent increase in market share in deposits."We've had month after month of positive market share (growth) in all our key product lines that we haven't had in years.”

What do you think?

Could the bank have achieved the same growth by launching an innovative new deposit product and releasing it on Facebook?

Should banks be redirecting the millions of dollars they spend on TV advertising to services that provide real value to customers?

Social media shouldn't only be about bank bashing

What do beer ads, rejuvenating face cream and bank managers all have in common?

They’re all the subject of some entertaining spoof ads, created by users of the ABC’s website for new TV program the Gruen Transfer.

It’s another case of social media related to banking that is more about bank bashing than anything else.

Some of the titles of the many videos put together by consumers on the site include:
“We don’t care about anyone”, “Bad bank” and “Bullsh*t is our business.”

The site is getting some strong traffic with viewings of the spoof ads also high for user-generated content.

One contribution titled “A bank that tells it like it is” reflects the overall theme of the videos with lines including “At Gruen bank our queues are short because most of our customers have given up trying.”
“Take out one of our low interest high risk loans today. You’ll be paying it off until you die. And then it will be your children’s problem.”
“Gruen Bank – Bleeding you dry for 25 years.”

The site is an interesting research vehicle for bank marketers.

Instead of believing that consumers care about the latest product feature or promotional offer perhaps financial services marketers should be working out better ways to connect with customers, to generate a laugh, or alter perceptions that the bank only cares about the bank/shareholders and not its customers.

Good examples of institutions doing this include Raboplus, Community First Credit Union, and Savings & Loans.

Isn’t it time a major bank started using social media to connect with customers?