How Smaller Banks Can Grab Credit Card Business Back from Megabanks

Consumer media often focuses on the card program features and incentives made by major national issuers. That means that offerings from regional and community banks and credit unions receive short shrift even though they may actually be more appealing to many people. Here are three ways to build visibility.

When it comes to credit card marketing, regional banks and credit unions are mostly missing the mark when it comes to attracting existing customers and prospects to their products. Now is a good time for banks and credit unions to reexamine their credit card marketing strategy because historical data tells us people re-evaluate their credit cards during difficult economic times.

In 2011, for example, the Federal Reserve released a post-recession credit participation study showing that 68% of consumers with credit scores below 660 had an average of 3.3 credit inquiries in 2010, and around 30% of those in the top credit bracket (780+) were also evaluating their credit, with slightly under two credit inquiries taking place in the same time frame.

These credit inquiries show that people were increasingly looking for credit solutions during the peak recession years. And, according to Federal Reserve data from 2007-2009, as mass employment, reduced wages and other financial pressures forced many Americans to purchase everyday necessities with credit cards, consumer use of credit spiked nearly 20%. These examples demonstrate that people are likely looking at maximizing rewards, taking advantage of cash back and reducing risks with interest-free financing and other benefits from credit cards today as we experience another economic downturn.

National Brands Don’t Always Offer the Best Card Options

Big names like Chase, Citi, Discover and Capital One enjoy a lot of notoriety, but newer players, like Apple Card from Goldman Sachs and Apple, are entering the market and further muddying the waters for consumers seeking the best credit card for their needs. Yet while known brands may have more existing clout and brand awareness with consumers, there’s one thing they don’t always have: the best rewards options.

Regional banks and credit unions have an opportunity to shine in this market as many of their credit cards provide comparable or better rewards programs, cash back percentages or other benefits when combined with an existing banking relationship.

For example, Huntington Voice offers “late fee grace,” which gives cardholders an extra day to pay if a payment is missed. Voice also gives consumers their choice of two ways to save. One option is to earn triple points rewards on the most common category of purchase the consumer makes. Points can be converted to cash, merchandise offered by the bank, gift cards at retailers including Amazon, and travel awards. The alternative is an annual percentage rate that’s 2% lower than usual.

The BB&T Spectrum Cash Rewards Card, offered by Truist, offers 10% bonus cash when redeemed into a BB&T checking or savings account. Meanwhile, on the other side of the Truist merger, the SunTrust Cash Back Card offers a Loyalty Cash reward of 10% or more when redeeming cash rewards back into a SunTrust account.

And, most mid-tier banks offer 1.5% cash back on all purchases with no fees. On top of the impressive cash-back options, consumers obtain the convenience of tracking their bank accounts and credit cards via a single brand and source.

In addition to cash-back benefits, credit unions and regional banks are offering some noteworthy points programs, including PNC Cash Rewards and Fifth Third’s Trio, which focus on offering 2-4% cash back on restaurants, groceries, gas, drug stores and utility payments, as well as the ability to earn a $100 signup bonus. Both also feature no annual fee.

Where Marketing Fails for Smaller Financial Institutions

When it comes to marketing regional bank and credit union credit cards, there are some setbacks beyond the organizations’ control.

One of those is the “best” lists easily found online. These rankings often only evaluate national credit cards, so when consumers are searching to figure out which card may work best for them, they’re not even seeing regional bank or credit union card offerings.

This is one reason why some consumers don’t even realize local banks may have options that meet their needs and provide local support. For some consumers, there’s a disconnect; they don’t even consider their neighborhood bank as an option for credit cards.

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Three Opportunities for Smaller Card Issuers Via Smarter Marketing

Regional banks and credit unions have an opportunity to get their offerings in front of consumers at times of shifting consumer behavior (like now), when consumers are exploring financial options, or at times when they want to see their dollars go back to the local community, which is also something people are prioritizing right now.

1. SEO and Content Marketing.

Better messaging and digital presence represent the biggest opportunity areas for regional banks and credit unions. The adage of, “You have to spend money to make money,” rings true here. Staying up to date on keyword searches online is valuable, and smaller issuers need to understand what consumers need and are searching for. Only then can they craft messaging and author blog posts and other materials that help their potential audience.

Imagine if a blog post from a regional bank branch came up in Google’s search results when someone locally was searching for new credit card offerings, instead of one of those “best” lists. It would require an investment in resources like search engine optimization and content marketing, but that bank could win a consumer they otherwise wouldn’t have had a chance with had the “best” list been the consumer’s first and only click.

2. Social Media Marketing.

Regional banks and credit unions have an unbelievable resource at their disposal that most don’t even utilize — social media. Pew Research states that about seven in ten Americans use social media in some way. However, local banks and credit unions often don’t have their own social media channels — and if they do — the accounts are likely left inactive and therefore useless.

Card issuers need to ensure consumers can find them and see them as a resource. How do you become a resource if you don’t have any followers?

That will often require an initial investment into social media ads or retargeting. The good news is the investment should be nominal compared to something like a broadcast TV or radio ad. Drill down to find specific audience segments that match a prospective client profile, and pay for social ads just to those groups. Slowly, as ads trigger an increase in social media following, organic growth in the form of engagement will occur. Of course, content marketing is the critical component here, as consumers will not engage with content that is not high-quality, accurate and authoritative.

3. Increased Physical Presence — Really.

Fewer people are walking into their local financial institutions right now, but the personalized service of a local branch is still a major differentiator between big banks and local options. Research from Adobe Analytics indicates the majority of people of all ages agree that a physical bank branch is still an important part of banking. As such, regional banks and credit unions should amplify their credit card offerings within the physical space of their branch. This goes beyond a small sign at the teller’s station; physical marketing should be present throughout the space. It should amplify the overall brand and be informative as opposed to sales-focused.

The rewards and benefits of regional bank and credit union card offerings are plenty. The problem is not enough people are aware of them. It is up to the regional bank and credit union marketers to build awareness and ultimately increase new cardholders by using the best in content marketing, social media marketing, SEO and brand marketing initiatives to better inform consumers about what they have to offer.

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