In banking, there’s no shortage of new challenges and competitive threats keeping financial marketers up at night. Facing increasingly intense pressure, traditional institutions are innovating faster than ever.
Financial marketers may be short on staff, on time, on budget, on certain kinds of expertise … but one thing they aren’t short of is competitors. Which ones are giving execs working at traditional financial institution ulcers? Is it those hometown community banks just down the street? Big megabanks loaded with tech and hundreds of branches? The rise of big credit unions? New digital-only banks? Or the threat Amazon represented if they offered a checking account? There’s one thing every bank and credit union has in common: everyone want to eat their lunch. And maybe their dinner and dessert too.
This is one of the big conversation threads dominating Day 1 at The Financial Brand Forum. How many — and what types of — competitors banks and credit unions now square off against every day pose the greatest risks?
The competitive pressures facing traditional banking providers are growing deeper, wider, and more intense every day. And the list of competitors keeps growing — from GAFA and their ilk to digital banks like Marcus and neobank challengers like N26 and SoFi… not to mention the bank or credit union across the street or in the next town.
Of the bank and credit union executives interviewed by The Financial Brand, not everyone agrees on where the greatest competition is coming from. But all agree the threats are there.
GAFA: 10,000-Pound Gorillas or Side Show?
“Our biggest competitors are brands like Amazon, Apple, and Walmart,” says Dennis Rhee, CMO at First Financial Bank, N.A., Terre Haute, Ind. “Companies that have already aggregated a massive group of users will continually push the banking experience to reduce stumbling blocks in their own customer journeys.”
Rhee arrived at First Financial last year after extensive sales and marketing experience with Harley-Davidson and Triumph Motorcycles. He’s been working to help the bank rev up its look and feel to compete with the likes of GAFA and fintechs.
An ongoing challenge, he says, “is continually elevating our customer journey into a seamless experience. I think many in banks and credit unions are overlooking how consumers compare what they do to the changes in retail,” says Rhee. “Consumers are now in charge, and the typical banking experience is fraught with pain points.”
Any bank or credit union marketer who has a Prime account has drooled over Amazon’s digital capabilities. Even so, not every marketer buys Amazon as the new bank across the digital street.
Take John Hanley, SVP and Senior Director of Marketing at Equity Bank, Kansas City, Mo. “I refuse the answer that our biggest competitors are Google, Amazon, Apple and the rest,” says Hanley. “That’s easy for consultants to say. But the reality is that those companies already have financial institutions where they want us, where significantly more and more ad and tech dollars flow into them.”
Hanley sees large banks and neobanks that he believes pose the greatest immediate threat to banks like his.
What worries him is a fundamental mismatch between what consumers say and what they do. “Our ‘strength’ is that almost all research indicates that consumers want to bank with a bank in their community,” says Hanley. “Well, they say this. But their behavior is different.”
The truth is, financial marketers labor away at the confluence of multiple trends, a challenge as multidimensional as the mind of the consumer.
Brian Nutt, a longtime observer of the industry now with Spectrio, sees banks and credit union marketers facing the biggest competitive onslaught of their careers. He compares their situation to D-Day at Normandy — except that traditional financial players are the ones awaiting the invasion.
“Cloud-based core systems with open-banking APIs are the landing craft,” says Nutt. “We are in for a full-out war of wills.”
Nutt believes survivors will be those institutions learn to “move with the swiftness of Silicon Valley rather than Main Street. The race is to change to cloud-based, open-architecture core systems that invite innovation.”
Financial institutions must learn about, acquire, and implement these changes faster than the comparatively glacial pace of branch transformation that started almost a decade ago.
“This is not happening two years from now,” warns Nutt. “This is already happening!”