Tech Advances Help Banks Develop Bonds

Crain’s Cleveland Business – Monday, November 14, 2011

Tech advances help banks develop bonds

By Sid Good

Good Marketing, Inc.

Each generation seems to reflect a different relationship with its banks. As an aging Baby Boomer, I love the convenience of ATMs to handle a majority of my banking needs, and I appreciate the value of accessing my accounts online.

And while there are many in our parents’ and grandparents’ generation who still actually go inside a bank to conduct their business, younger generations have been forging a new banking relationship dynamic that few banks have noticed or leveraged most effectively.

First and foremost, consumers are no longer geographically dependent on their local banks. Depending on priorities for products and services, potential bank customers can simply access the Internet, identify what banks offer the best options for what is most important to that individual or family, and proceed to forge a relationship with that institution.

Since geography no longer plays a significant role in this decision, the opportunity for a long-term relationship between a bank and its customers is substantial since there is no longer the need to switch banks when moving to a different location. In addition, the opportunity for banks is that they are no longer specifically dependent on consumers who fall within their geographic footprints since they can now reach out to consumers who can access their banking services online.

Amazingly, though, very few banks offer any substantial outreach to younger consumers until they are college age, well past the time when banking services are needed.

In light of this phenomenon, banks need to better leverage — albeit with parent engagement — the 10- to 19-year-old market. They are just beginning to become more engaged with personal finance issues and are most at risk if good personal finance habits are not established early. With over $200 billion in collective spending power, this age group is in desperate need of learning the basics of personal finance, savings, investments, budgeting and other money management issues.

Even though a significant number of teens might already have savings accounts, write checks or have debit cards in their own name, most teens know little about personal finance and investing basics. The good news is that, more often than not,they would like to learn more.

Even among major banks, if you compare website homepages, there is little that differentiates one bank brand from the other. And there is even less that identifies how the featured products or services are relevant for younger consumers. The few exceptions seem to be the banks that have begun to offer banking apps as a convenience for all customers.

With the capabilities of Internet banking and other social media platforms, banks now have the opportunity to nurture relationships with younger consumers and make them customers for life. Few banks, however, have ever reached out to actually talk to younger consumers to determine what they want, what is most important about any banking relationship, and how to make bank products and services more compelling to this age group.

It is, obviously, a moving target — one that will definitely change over time. But the key is to be there front and center when the need occurs and the benefit can be provided.

We all save for different things at different times of our lives (i.e., cars, college, homes, etc.). And we all save for the same things throughout our lives (i.e., retirement, health care, etc.). Consumers need to know that banks are there for them at every stage of the process — a constant and consistent resource and partner for all financial needs.

It is not one size fits all. It is dynamic and always unique to every individual. Banks just need to learn how to best deliver on this option. It is done in the world of private banking. It just needs to be replicated in the mass market for younger consumers on up. Fortunately, the dynamics of the Internet and other social media options make it achievable.

In this current economy, we expect our elected officials to be more fiscally responsible. We certainly require that of our families and ourselves. Banks that choose to work in partnership with their customer base — at all age levels — to achieve that goal will definitely benefit from the investment.

However, the earlier banks start to reach out to potential customers, the longer and more substantial that relationship will be. Tweens and teens, and their parents, will especially respond to relevant, engaging programs just for them. The result is long-term, loyal customers and ongoing, innovative growth. The only question that remains is, “What new banking dynamic will be possible and necessary to appeal to the next generation of bank consumers?’