Checking and Loan CSI - Know the Clues.

Bank of America, Citi, Chase and Wells Fargo hold about 39% of US deposits.  Seriously?  

With these guys holding the market share cards, if your community bank or credit union isn't showing account growth ... it's a crime.

But, if Gil Grissom has taught me anything, it's that ANY crime can be solved (usually in less than 45 minutes).

Lets take an Account CSI course on 2 key product areas - without the messy finger print powder or blood spatter.

Loans

To a certain extent, lending is a numbers game. Increase applications and all is well, right? Heck no!

Here’s an example: We had a one-branch client a few years ago where we conducted a loan promotion to the neighborhoods surrounding the branch. The campaign was successful in attracting interest and apps, but few were approvable – even though we used household income as a qualifier. What we really did was generate more work … not more loans.

Recently, a very close friend of mine said that, as a lender, her job is to read people. Totally true! Every time we fund a loan, we’re pushing our poker chips on the table. But, if you don't push chips out, you can never rake chips back in and build your stacks.

For lending, like poker, you need to be able to read the signs. If you're not seeing the loan results you want, of course you'll want to increase apps – but you MUST make sure you’re getting the most from each one. 

Lending CSI is about finding the clues in your process and patching the leaks:

• What is the trending in your applications?
• Number of apps?
• Dollar amounts?
• For which products?
• How many are you approving?
• Of those denied ... Why? How much opportunity are you missing?
• What were the credit scores of those denied? Are there ancillary circumstances?
• What would it take to approve 5-10% of those denied?
• What can we learn from this segment to better target next time?
• Of those approved, how many are funded? If not, why?
• This is often where the missed opportunities are hidden.

Checking

According to a 2011 FDIC Survey of un and underbanked, about 10% of US households do not have a checking account. Glass half full ... that means you have 90% checking penetration, right?!? Why not?!?

The "checking account" is your customer's access account. It's the lifeline to everything from their monthly bills to their morning skinny mocha latte - extra espresso. If you don't have it, someone else does.

Checking CSI is about finding clues that your customers and members leave:

• Awareness: It sounds a bit crazy from our side of the desk, but do your customers even think of you for checking? You'd be shocked and hurt by the answer most of the time. If they don't have an account with you it's often that easy.
• Competition/differentiation: You need to, at minimum, keeping up with the Jones'. Remember, this is an Access Account. It's more important for you to have all of the access tools than to offer rewards or even interest. How do you stack up against the other institutions?
• We sell trust: Every positive interaction should include a message about checking. Every product sold should be tied to checking. Build on your happy experiences.
• You cannot over communicate: The cliché     says that the only 2 sure things are death and taxes. My friends, there is a 3rd ... some day, in the not-to-distant future the big banks will tick-off their customers. When they do, you need to be top of mind. That doesn't mean planning quarterly campaigns ... it means drowning them in checking messages at the front line and at home. Just when you think you're over communicating - you're probably just starting to do it right.

Once you have the accounts, you need to keep them. There are almost always clues to who will leave you:

• Balance trends: Rarely will someone walk into a branch and simply close their account. There is typically a balance bleed off period prior to the closing. If you can, watch for balance decrease triggers and react with a phone call to make sure the customer is satisfied.
• Transaction trends: Having an account is one thing ... using it is something MUCH more important. Communicate with those inactive accounts.
• What access is connected?: The more the better. You don't typically ask if a customer would like checks with their checking account, right? So, why are we asking about debit cards? We need to assume some basic access points and ask the right questions to see how a customer prefers to use the product. Mobile? Online? Text? You don't know what to discuss until you know how they prefer to use it. Watch out for those checking accounts with few access tools.
• Analyze your attrition by account: You may not be getting folks into the right account type or you may need to consider making some product changes if one account stands out here.

You don't need to look good in a white lab coat or have a corny one-liner right before each commercial break to do this stuff. Simply determine what crime is being committed against your growth and look for the clues. Then cue the Who music and get to work.

We bring these marketing philosophies to credit unions and community banks nationwide, and would love to bring them to your institution too. Contact us to see how.

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Multicultural Technology Leadership: Tablets and Blogs

Over the past several years we have measured technology use and adoption at the Center for Hispanic Marketing Communication at Florida State University. We have consistently found that emerging minorities tend to lead in most areas of technology adoption. In 2012 with the cooperation of Research Now and the leadership of Ms. Melanie Courtright, we again collected an online national sample composed of Hispanics and Asians born in the US and those born abroad, in addition to African Americans and Non-Hispanic Whites. We used the country of birth as a proxy for acculturation to see if technology adoption varied accordingly.

Tablets are creating chaos in the computer industry because consumers are adopting them and discarding laptops, desktops, and netbooks. The following chart shows how adoption of tablets varies of by cultural group and by place of birth.



As can be seen, Asians born abroad exhibit the largest penetration of tablet current ownership and also their projected ownership in the next year. Their affluence and technological savvy may account for this trend. Hispanics not born in the US are the second group in their ownership of tablets, and their minority counterparts follow them closely. Non-Hispanic Whites, however, lag substantially. This speaks of the technology eagerness of minorities and their leadership in technology adoption.  The differences, however, appear to vanish when looking at aspirations for the next year. Thus, minorities innovate but tablets are becoming very desirable overall.

Having a blog should be a good indicator of innovativeness in web communications. The following chart illustrates the penetration of blog ownership in different cultural groups.



Current blog ownership is highest among Asians, followed by Hispanics. African Americans and Non-Hispanic Whites lag. Tendencies for the next year vary and highlight that those not born in the US are more interested in having a blog, both Latinos and Asians. African Americans also show the aspiration to have a blog in a year in sharp contrast to their current blog ownership. Non-Hispanic Whites seem less eager to have a blog now and in the future, and interestingly Asians born in the US are at the same level as Non-Hispanic Whites in their future blog ownership.

Overall, these trends are puzzling and definitely should ignite the imagination of technology marketers. The relative popularity of blogs and their future growth indicate the social eagerness of minority groups. Culturally, blogs provide an outlet for creativity, expression, and a voice that minorities did not have before.  Marketers can take advantage of this eagerness by using these growing blogs as advertising venues for reaching out to minority networks, for example.

The phenomenal adoption of tablets and their appeal for the near future are more striking.  Mobile advertising will become increasingly powerful and tablets will be the new platform for communication. That minorities are leading now should give food for thought to marketers that are trying to predict future trends and understand where their brands will be in the near future.

The data for this study was collected by Research Now of Dallas, Texas, thanks to the generous initiative of Ms. Melanie Courtright. Research Now contributed these data to the research efforts of the Center for Hispanic Marketing Communication at Florida State University. This online survey included the responses of 936 Asians (398 US born), 458 African Americans, 833 Hispanics (624 US born), and 456 non Hispanic Whites. This national sample had quotas for US region, age, and gender to increase representativeness.

Hispanic Income Trends: Implications for Marketing

The median income of Hispanic households has lagged behind the overall population of the United States for a long time and does not seem to be getting better. The largest difference since 1980 was in 1996 when the disparity was of $14,465 dollars (in 2008 dollars), according to the U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements. Since 1980 the smallest gap occurred in 1981 with a difference of $8,573. The latest figures available are for 2008 show a difference of $12,390, a gap similar to gaps in the 1990's. See the historical trends table on the left.

The current gap probably reflects some of the social and economic issues that resulted from the downturn of the economy between 2007 and 2009. But there are uplifting news. My analysis of the American Community Survey data of 2008 shows that income differences are not evenly distributed in the population as shown below:

It is interesting to observe that the gaps between the overall population median income and that of Hispanics is largest at the higher income levels, and interestingly there are more Hispanics in the middle income categories than in the overall population. This is very revealing because for the majority of consumer products income levels between $25,000 and $60,000 are ideal, and that is the range in which there are more Hispanics proportional to their population. This alone is a very important reason for marketers to pay attention to Latinos.

Clearly, the fact that proportionally Hispanics have some more households in the lower end of the distribution and fewer in the upper end is not desirable. Nevertheless, where the sweet spot of most marketers resides, that is in the middle, Hispanics have higher representation. This is surprising and uplifting, and helps understand that Hispanics are not generally poorer but they are better represented where it counts for marketers.

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