Posted by: Marsha Nix

Understanding Community Bank Challenges

First, let’s define what it means to be a community bank.  The dictionary tells us: bank is a noun and it is a commercial bank that derives funds from and …

Posted by: Marsha Nix

Understanding Community Bank Challenges

First, let’s define what it means to be a community bank.  The dictionary tells us: bank is a noun and it is a commercial bank that derives funds from and …

First, let’s define what it means to be a community bank.  The dictionary tells us: bank is a noun and it is a commercial bank that derives funds from and lends to the community where it operates, and is not affiliated with a multibank holding company.

The FDIC Community Bank Study – Chapter 1 states; “community banks focus on providing traditional banking services in their local communities. They obtain most of their core deposits locally and make many of their loans to local businesses. For this reason, they are often considered to be “relationship” bankers as opposed to “transactional” bankers.”

Even as the number of community banks has declined for more than 25 years, falling from 6,802 in 2011 to 4,750 in 2019, with more than 29,000 branches (FDIC Community Bank Study 2020), community banks have proven to be resilient.

Why is defining a community bank important?

Unlike large transactional banks, community banks have their own distinctive strategies for survival and growth.  This allows leadership to focus on building value and sustainability with their customer base.   Community banks continue to be a vital part of the financial ecosystem.  Today’s community bank can combine their ageless strengths with the very latest digital technologies and strategies to better serve their customers today and into the future.

Our economy needs the community bank. They are particularly important in the U.S., providing 97% of all services to banking customers.  Their success is vital and have a fundamentally important part to play in both their local areas and the wider economy.  The community banks’ presence has a direct effect on rural and micropolitan counties via faster employment growth and may even boost a region’s resilience to macroeconomic shocks.

All of this information plays a large role in how marketing approaches the challenges prompted, not only by the pandemic, but also by the supercharged trends they were already facing, like Demographics, physical branches, face-to-face vs online, and to be blunt, unwillingness to innovate.

The difference between a print vendor and a print partner.

All banks have many options when it comes to print.  Their statement processor or core system will want to print their statements, envelopes, and statement stuffers.  Their core processor will try and convince them they are the only ones who can print their counter tickets (if they are even using counter tickets), and any other document that is used in processing customer information. They may or may not have a customer that owns a local print shop that they feel obligated to use. As check orders decline, their counter-check supplier may be expanding into statement processing, POS, and marketing brochures, all in an effort to increase print revenue. The list goes on.

What a print partner will help with.

Acquire more bank customers is number one

Drive product-specific utilization for loans, deposits, and ancillary services

Reduce administrative costs

Help integrate with digital marketing programs

Above all, help you succeed and understand your distinctive strategy.

Print is an integral part of a bank’s marketing and operations.  Whether it’s simple business cards, brochures, or marketing materials, all print contributes to increasing sales.  Print yields the highest response rates of any marketing channel with direct mail being the lead performer.

Print is on the rise, and the reason is simple, email campaigns have been showing diminishing returns for the past year. Why?  Banks, and other businesses, are abusing their email lists, and consumers are demanding more and more tools to block unsolicited or less important emails. The developers of email clients such as Gmail and Outlook are creating separate inboxes for social, promotions, clutter, and other non-priority emails.  Apple is restricting third-party cookies, and many are using the “block” function on their phones. The result is continuing declines in email opens and click-throughs.  Print is always delivered and always seen, touched, and experienced. 

Hyper-personalized direct mail from a well-developed database that is maintained and built for a targeted list is difficult, but it is something that pays off in spades.  Add this in conjunction with a robust onboarding process and the benefits will be new banking customers.  Moving customers from a deposit account or single loan service to a full suite of products will ensure a more loyal customer and longer retention.

Other issues are compliance and reducing administrative costs.  Compliance is a big challenge for the community bank.  They can outsource compliance or hire a compliance officer.  Either way, the community bank pays what the big guys pay so they need to use automation as much as possible.  Ensuring their privacy disclosures and other required communications are well presented and received on an automated basis continues to be a challenge.

As for reducing administrative costs, the print needs of banks and their storage and location of materials can create unnecessary administrative time and challenges.  Short-run digital reduces print obsolescence while meeting urgent delivery demands.  Inventory management is easier with robust utilization measurements. A print partner encourages the use of technology and does not fear the loss of print. The focus is on the success of the community bank.

The print partner is a major part of marketing.  Working together with the marketing team there can be amazing results. The teams can collaborate on the cost per outreach and predict response rates to determine the best multi-touch campaigns to implement.  Marketing can work with their TAG expert to analyze and produce usable data whether from spreadsheets or systems such as Jack Henry or Fiserv. 

A must for the community bank is the utilization of a CRM or other data collection tool.  Integration with other applications to use the data for automated campaigns is of utmost importance.  Take advantage of the power of two teams collaborating and maximize marketing plan effectiveness.

From direct mail to in-branch brochures, and from outdoor and indoor signage to handouts at trade shows and events, banks continue to need copious amounts of printed materials.  Print communications remain powerful marketing tools for the financial services industry yet streamlining ordering and maintaining brand cohesiveness between branches prove to be hurdles many have yet to master.

Print advertising connects more on an emotional level with readers than digital, it continues to be the go-to medium of financial services companies.  It offers readers a chance to linger over product and service messaging in a way that other channels don’t.  Print lasts longer. It lays around on the kitchen table or office desk, begging to be read.  Digital ads disappear in seconds.  Print is viewed as more trustworthy. Print insights the emotion of touch and feel, one of our first responses as a baby. And don’t forget print is cost-effective and recyclable.

Without question, a significant focus is online banking and digital access to banks.  Without question, it is increasing greatly, and a requirement for any successful bank. Therefore, mixed marketing such as a postcard with a QR code or link to online banking will help provide direct access to products and services. 

What do you think keeps marketing decision-makers up at night?  For larger institutions, they may be considering the demand for consistency across multiple branches.  Uniformity in messaging, seamless installation, and access to additional products may require a program solution. For medium and smaller community banks, it may be contemplating local business investments, looking to the local chamber of commerce to bring in more opportunities and to demonstrate the value of such investments to the community.  Think mailing campaigns, vibrant signage, and community canvassing, as well as developing investment guides and infographics depicting the top areas of growth.

Every community bank wants its customers to trust their financial institution.  This includes trusting that both their personal and financial well-being are being looked after.  Refining branch-to-branch information flows while quickly distributing new collateral based on changing interest rates and economic conditions is paramount to a community bank’s success.  They also lock in that trust by maintaining a positive perception and core position in the community while upholding compliance and regulatory mandates across print.  

What will a community bank look like in 2030 and beyond? If you are selling to a community bank, help them look to their strength and discover ways to translate these into digital options and use new technologies to enhance them.  If you are the marketing person at a community bank, find ways to do the above plus remember there are many ways to reach your target market.  You can benefit by targeting groups that are bonded online by shared interests.  You can invest in video call functionality to allow customers to benefit from the human touch combined with the convenience of mobile digital banking.  And don’t forget your aging customer base. They are an opportunity that can use accessibility technology to reach you due to the difficulty of visiting branches.  Streamlined, simple digital services can help reach older demographics and introduce them to new products, particularly when delivered by a brand they already know and trust.

Community banks can also experiment with peer-to-peer lending or other forms of lending, as well as funding investments in the area that customers will see, appreciate and remember. Local visibility is very hard for a large multinational institution but much easier for a community bank.

For the community bank what determines success is process efficiency, customer experience, customer service, and proactive marketing. An advanced and skilled print partner can make a remarkable difference in all those areas.