To Compete with Fintechs, Bank Marketers Must Embrace Niche Strategy

Most bank marketing campaigns fall short because they try to be everything to everyone or miss what customers actually care about. To compete against fintechs and megabanks, banks and credit unions need to address very specific customer problems. Here's how.
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Most financial institutions marketing campaigns do two things that hurt them:

First, they talk about things that the bank is excited about such as online account opening and the ability to bank from anywhere — things that big banks have been doing for years or decades — and they don’t focus on what the customer is excited about. Typically customers are interested in finding an easy resolution to financial problems, not having to talk to a person, and in general not having to think about their bank.

Second, they try to be everything to everyone. In the face of intense competitive pressure from megabanks and fintechs, attempts to appeal to everyone tend to mean that the message isn’t all that exciting to anyone.

So how should banks and credit unions adjust their marketing strategies to better stand out? Become a problem-solver, not an advertiser.

Think about the customers that you want, and what problems they’re having. Your institution, not a specific product, is the solution to their problems. Yes, they might need a checking account today, but they can get that anywhere. The fact that your bank has a checking account is not enough for them to come to you.

What you’re both going for is a long-term relationship — and long-term relationships are formed through trust, which grows when you solve problems. And you know you can creatively solve problems better than your competitors, right? Show that off in your messaging. As your message or offer gets more specific, it will resonate more with specific customer groups, whose excitement will go through the roof.

Shift Your Focus:

People can get a checking account anywhere. It's the value of your entire financial institution, and its ability to solve problems, that will attract (and retain) consumers.

Curb Your Enthusiasm and Learn What Excites Customers

Let’s take the general “We now have online account opening” ad. Of course you’re excited about this new process for your bank. But how many customers or potential customers are out there thinking, “I really need to open a checking account, I wish that XYZ Bank would let me do that online?” Hint: very few.

While online account opening is important, keep in mind that big banks have been doing this for a generation. (No joke: Wells Fargo is celebrating their 27th year of online banking!) If a customer needed an account opened quickly, they either have come into the bank already, or they went with a competitor.

This is not to say that you shouldn’t promote your new online account opening abilities — you should absolutely let customers know you have it — but keep in mind that it’s table stakes, something that people expect, and do not get excited about like you do. It should be a box on your website, not the focus of your largest paid advertising campaign.

If you can get very specific with problems, you’ll get much more excited customers. That means more heavy lifting for marketing — you’ll have to craft multiple messages for different types of customers and problems, rather than just saying “We have online account opening.” But think through all the different benefits of online account opening for specific customer groups, and you can create different campaign messaging for each one.

Emulate Fintechs and Their Laser-Focus on Microniches

It’s hard to run many campaign messaging variations at once. Fintechs actually don’t do this – because when they get started, they’re laser focused, typically, on one small sliver of the market. Their messages are naturally very specific and very exciting to their target customer group. Think of Chime and people who want their paychecks a day or two earlier. Consumers see thousands of ads a day, so the default is to tune them out rather than pay attention. But they’ll pay attention to something that speaks specifically to them.

This is not a niche — it’s far more specific than that. The word “niche” makes you think of Millennials, Gen Z, or other demographic groups. What I’m talking about here is a combination of a group and a specific problem, like Millennials who want to buy their first home in the next one to three years, and are saving for a down payment and learning about the process. That’s a microniche, and a startup like Better.com can completely own it because they are laser-focused on it.

Personalization Needed:

Attempts to appeal to everyone inevitably mean that the message won't be exciting to anyone.

Most traditional institutions already offer mortgages and would love the first-time Millennial homebuyers — but banks and credit unions typically advertise general mortgage products, not the ease of applying or working with the bank. Why does a borrower choose Better.com versus even calling you in the first place? On Better.com, they can find customized rates in about three clicks, compared with the perception of having to call the bank, talk to a person and then deal with follow up sales calls for weeks afterwards.

It’s not enough today to have a great brand message that you target to broad demographic groups. Financial institutions that have successful marketing today are breaking through the noise by solving specific consumer problems, rather than offering products. Their message is not “We offer a mortgage,” but “We can get you a mortgage in three clicks without having to talk to anyone.”

Four Ways to Find Suitable Microniches

Any established bank or credit union could have several or even dozens of possible microniches. Your marketing team’s mindset needs to shift from “everything to everyone” to “next best offer.”

Here’s a process to find one or more microniche segments:

1. Identify your opportunities
What are your goals for the next three to five years? Increasing product adoption, or growing your loans, credit cards or merchant services business?

Pick the top few that will enhance your bottom line. Then, conduct a brainstorming workshop with your department heads. Give them five to ten minutes to write down as many super-specific growth opportunities as they can. Perhaps there’s opportunity in debit card holders who haven’t used their cards in several months, a line of credit customer who hasn’t taken a draw this quarter or a high-balance depositor who doesn’t use your wealth management services.

Refine the list and prioritize it.

2. Go to the data
Pull customer data regarding the top three to five ideas. If you have a data analytics tool, great — but when you’re starting, just dump the data into an Excel pivot table. The goal here is to understand how you can identify those opportunities in the data – e.g., how do you generate a list of email addresses of customers who haven’t tapped their line of credit this quarter?

3. Find the action trigger
Often, having a specific message isn’t even enough — you have to also create the sense of urgency for your customer to take action now. It’s not enough to remind customers about your lines of credit — you’ll do far better by triggering an email or phone call to them just after they make a big purchase. Think about what trigger makes the most sense for the customer group and the problem you’re solving.

4. Rinse and repeat
The trick with triggered campaigns is that they need to be set up to send repeatedly. In the line of credit example, every day you could have new customers making large hardware store purchases. How do you keep up with it – especially if you’re doing this for multiple microniches?

When you start, it might be enough to pull a new email list once a week or even once a month. But you should take advantage of automation features in an email tool – platforms like Constant Contact and MailChimp have automation flows and customer journeys that can be set up against triggers. They won’t connect directly to your core banking system without some custom software development, but as you pull the data, you can tag the email addresses and cause actions to take place.

As you progress and see results for certain microniches, it might make sense to do some custom development to regularly (even daily) pull data changes over to your automation tool so the whole flow is automated. Realistically, you’ll always be adding new microniches, so you’ll want to start thinking about a process for how to manage it over time.

Bottom line, your marketing needs to not be everything to everyone. Instead of winning 1% to 2% of a large market, more specific messaging and targeting can help you win 30%, 40% or more of a microniche market. Do this across several niche markets and that 1% to 2% of the larger pie will start to look pretty small.

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