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Andrew Davidson 
Susan Menke 
Susan Wolfe 
Lisa Hronek Archive for February, 2010
How people feel about financial services companies and social media
Most financial services companies are committed to the world of social media. But
what do specific groups think about financial companies on their social networking sites?
The older the respondent, the more likely they are to say that they use social networking only to connect with friends and family (70% of those 55+ vs. 50% of those 24 and younger). They are also more likely to say they ignore the advertising of financial companies (36% of those 55+ vs. 25% of those 25-34) and find it annoying (36% of those 55+ vs. 25% of those 25-34).
The good news is that these numbers do not tend to increase with income. The number of people who find financial advertising annoying actually drops off at income levels of $100k+.
So what does this mean? Financial companies may want to consider targeting by age on more specifically targeted sites. However, for social media overall, targeting by income will probably work best.
Offering coupons for local businesses like restaurants on social networking sites would be successful with 16% of consumers overall, but this drops off with age. The attractiveness of this incentive jumps substantially with incomes of $100k+. Providing incentives such as contests, promotional rates, etc. appeals to 11% overall. It similarly drops off with age but increases with income.
The percentage of respondents who agree that “the company donates to a cause I believe in” is an attractive incentive (8% overall), This drops off with age but jumps substantially with income over $100k. And the percentage who agree with the statement, “I feel more comfortable with a company after seeing it on a social networking site” (8% overall) drops off with age but is consistent across income groups.
I’m working on Mintel’s Social Media and Financial Services report right now (due to publish April 2010). I’ll keep you posted of other insights I find as I get deeper into the data.
PNC enjoys the success of “virtual” banking
What does Gen Y want? Well, where can I start… They operate differently than any other generation: they’re technologically savvy, used to getting what they want and getting it now, connected to friends and family through cell phones and social networking sites almost all the time.
To target this group with specific (and often fickle) needs, PNC introduced its Virtual Wallet account in mid-2008, followed by the Virtual Wallet Student Account a year later. The company reports that the account has been a success, attracting 30,000 new customers in 2008, 60% of which are new to PNC. In addition, these virtual accounts have higher balances and better retention than traditional accounts.
A way to win Gen Y customers
The product portfolio is actually three accounts in one, which allows customers to direct money into different buckets labeled spend, reserve and grow. This is then enhanced by a personal finance tool. The product was built based on research as to how young people compartmentalize money in their minds.
Changing the online banking experience
The account works differently from traditional online banking tools, mainly because focus groups indicated that Generation Y feels that most banking sites are “clunky.” Instead of transferring money the traditional way, customers can drag money from account to account on one screen. Instead of presenting information in a traditional ledger format, customers view things on a calendar. The displays estimate future cash flow based on when customers are paid, when they pay bills, and on their spending habits. Customers can also set various saving rules with a feature called “Savings Engine.” All in all, the product is uniquely designed to respond to exactly what and how Gen Y wants to bank.
Marketing support
The company uses direct mail, email and print to promote the Virtual Wallet. One email targets existing customers aged 18-25, stating, “What are you waiting for? Go for the upgrade!” In direct mail, the account is marketed as a “high-definition online view of your money where you can pay bills, plan for monthly expenses, and save for the future.” Print ads go into more detail about the account and the features that make it different from a traditional account.
Looking forward
PNC stated that the cost of the project was $15 million and it expects to break even in two years. The company was smart to also release Virtual Wallet Student, since it allows the student to move right into the young adult version of the account. This helps ensure that PNC retains customers as they move into different life stages and need more financial products. Mintel Comperemedia expects other innovative products, targeted to specific demographic segments, to launch in 2010.
A look at rebranding: Embrace Home Loans
In December 2009, Advanced Financial Services changed its name and rebranded as Embrace Home Loans. This was a significant move for a company that has been in operation since 1983. Advanced Financial Services used direct mail as its primary marketing channel and in Q4 2009, we began to track the first direct mail offers branded as Embrace Home Loans.
Advanced Financial Services actually remained profitable despite the downturn so, therefore, the rebranding is more about tapping into its potential for future growth. Commenting on the name change in a press release, Kurt Noyce, President of Embrace Home Loans, said, “we now find ourselves in an enviable position with many opportunities for future growth, but our name hasn’t kept pace with that growth. We have not been available in all markets and were easily confused with many other financial services companies. So we decided to make a change with a name that defines not only what we do, but also what we care about.”
The launch includes a new website that promises to “help customers feel comfortable and secure every step of the way.” The site features customer testimonials from the 46 states Embrace operates in, as well as video recordings of staff explaining how they have helped customers.
Most of the offers from Embrace Home Loans in Q4 2009 utilize a black-and-white version of the orange Embrace logo and the same creative that was mailed under the Advanced Financial Services brand.
Some offers, however, reveal a new orange logo and the message, “embrace the possibility.” These offers tap into Embrace’s new values. For example, in one marketing piece, a Post-it note adds a personal touch and the text is customer centric in its focus. The offer explains how Embrace wants to save its customers money because rates are at historically low levels.
The Embrace rebranding follows the launch of the Bank of America Home Loans brand in April 2009. These two firms are currently the top two direct marketers in terms mortgage acquisition mail volume. The rebranding efforts are encouraging because both lenders are re-positioning themselves to take advantage of a potential recovery in the mortgage market.
More predictions for the banking industry in 2010
With the turn of the New Year and news about potential banking legislation, I’ve been thinking about how the banking industry will change this year. We just put out a press release with five of my predictions, but here are some more things I’ve been thinking about for banking in 2010:
Prepaid cards could be a good alternative to checking accounts
The prepaid industry claims that, for some lower-income consumers, prepaid cards can be cheaper than traditional bank accounts with overdraft protection. This will certainly be true if banks begin to institute monthly fees or fees for bill payments and other types of transactions that are currently free. In a sign that there is more interest in prepaid cards, MasterCard reported it is looking at ways to market prepaid cards to the affluent.
Banks will seek to create “financially literate” customers
Much has been said about how the ongoing economic situation was caused—in part—by a lack of consumer knowledge about financial matters. The “Great Recession” been a wake-up call for every generation. According to Mintel consumer surveys, each generation is reacting differently, but young Echo Boomers have a strong desire to learn more about financial matters. Wells Fargo is tapping into this with its Virtual Island on Facebook.
Mobile banking is here to stay
The success and ubiquity of smart phones is driving banks and investment firms to develop applications that allow mobile banking and payments. User demand will be the reason that mobile banking succeeds. With teenagers and young adults relying on their phones in ways never imagined, mobile banking will become an expected service for the younger generations. At the same time, banks must carefully consider how they’ll engage mobile banking customers to ensure a long-term relationship.
Banks will begin to figure out social networking
Banks have struggled with how to embrace social networking sites such as Twitter, Facebook and You Tube, but 2010 will see them finding new and better ways to get involved. Jwaala, for example, recently announced technology that allows customers to receive alerts through social networking sites rather than through email.
Overall however, 2010 won’t be about financial services companies setting up pages and groups on social networking sites. Instead, banks will start developing applications for use in social media and creating a presence that says something about their brand. They will begin to use social media to network with new groups of customers.