Promotional strategies for bank

The issues of promotion are becoming more and more complicated as internationalization of financial
services continues to increase. In the latter years, the Baltic States have emerged as attractive markets
for many western countries, and several banks have initiated operations there. The purpose of this
thesis is to gain a better understanding of international banks' promotion strategies in the Baltic States.
In order to reach our purpose we have conducted a case study of a Nordic retail bank's promotion
strategy in Estonia. For our data collection we have used interviews and documentations. Our study
shows that the most important promotion tools for financial services are personal selling and
advertising, in order to create awareness of the brand and establish personal relationships. The
external factors influencing the choice of promotion strategy are technology orientation of the industry,
cultural aspects, competitiveness of the market, and economic factors. Adaptation of the promotion
strategy is performed to a great extent, due to customers' different preferences and expectations, as
well as local conditions of the host country. However, banks attempt to standardize their promotion as
much as possible in order to reduce costs and reach economies of scale.
Banks have a unique challenge when it comes to marketing because they do not offer tangible products for consumers. Promoting
a bank requires convincing consumers to trust a bank with their money and make customers feel like they are getting the most
value for their money. Once customers invest with a bank, the bank must work to keep customers and get them to buy-in to
additional products.
Free Items
Free items help attract customers to a bank. Some consumers may be persuaded to switch banks with the promise of a small gift
certificate or household item. Other customers may respond to free money for opening an account with a certain minimum balance
or opening a premium account with the bank. To reduce the amount of free items given away, banks may partner with a local car
company or large retail chain and enter new customer names into a drawing for a free car or large gift certificate. Banks must
analyze the targeted customer base to determine what type of free items will most appeal to potential customers.
Word of Mouth
Word of mouth has the greatest potential to attract customers to a bank and draw customers away from a bank. Encourage current
customers to direct friends and family members to the bank by offering referral incentives in the form of lower fees or cash
rewards. Become involved in the community by sponsoring a local sports team, setting up a booth at a local festival or providing a
mobile ATM machine for a local event. Be sure to provide stellar customer service to all current users because a customer sharing
a negative experience about the bank may quickly erase the effect of any positive marketing efforts in a community.
Credit Cards
Offer specialized credit cards for consumers, such as cards designed for college students, small-business owners or mature
bankers. Cards with low interest rates and few fees typically attract more customers. A card that offers rewards or a cash-back
program may also appeal to consumers. Offer a line of prepaid debit cards, and encourage parents to set up accounts for their
children or allow teens to become authorized users on a parent's credit card. Teens who have already established a relationship
with a bank may be more likely to continue working with that bank when they turn 18 or begin earning their own income.

Ten Bank Marketer Resolutions for 2011

It is the dawning of a new year in banking with many of the same challenges that we saw in
2010. Our industry continues to be viewed in a less than positive light from both the
consumer and small business marketplace. The need for new customer growth and share of
wallet expansion underpins the need for new sources of non-interest fee income at a time
when regulations are dramatically reducing many traditional sources of revenue. In

addition, the expansion of transaction and communication channels are changing the ways we
interact with customers. These challenges are combined with an historically low interest rate
environment and a credit environment where there is a massive amount of money to lend at a
time when borrowing is more difficult and less desirable for many.
According to a national survey, the majority of personal resolutions in 2011 will revolve
around saving money, losing weight, changing a bad habit and being closer to loved ones.
Achieving any of these goals will take commitment, focus and changes in behavior. The same
can be said for the resolutions I have developed from traveling the country over the past few
months and being involved in a number of banks' annual planning efforts.
Here are areas where bank marketers believe they should focus in 2011:
1. Replace Lost Fee Income
Nothing has impacted banking over the past 12-18 months or will impact banking in 2011
more than the loss of fee income caused by the combination of the Card Act, Reg. E, and the
upcoming changes from the Durbin Amendment. Almost all other resolutions for the upcoming
year are built to address this need. The role of bank marketers in achieving fee income
replacement goals will include checking product restructuring and new fee-based product
development, increasing card transactions, improving customer engagement and better
resource allocation for results.
2. Improve the Customer Experience
Another overarching resolution similar to the personal resolution of being closer to loved ones,
bank marketers need to view all of their initiatives using the lens of understanding customer's
needs, looking out for customers and rewarding their relationship. In an environment of
heightened scrutiny of how we are treating customers, it will be more important than ever to
market to consumers and small businesses on a more personalized basis from the day they
open their first account and to build a reward structure that reinforces our commitment to
relationship retention and growth.
3. Focus on Incremental New Customer Growth
A new balance between quantity and quality of new accounts needs to be struck. With the
elimination of Free Checking occurring at most banks I visit, new acquisition models need to
be developed that take into account the new checking account continuum. Instead of
generating as many accounts as possible, banks will be focusing on the potential value of
relationships including the likelihood of engagement and retention. A premium will be paid for
those households that will immediately contribute to the bottom line.
4. Gather Email Addresses
When presenting at the BAI Retail Delivery Conference this Fall, it amazed me that there were
more banks that collected cell phone numbers than collected email addresses at the new
account desk. I suppose this phenomenon may be caused by the combination of more
households using a cell phone as opposed to a land line for home communication and the
relative ease of having a bank's IT team build another phone field into the new account
process as opposed to an email field. But with other communication channel cost
increasing and the improved results achieved when email is combined with more traditional
channels, the importance of collecting (and using) email addresses has never been more
important. Some banks are even considering stand alone marketing initiatives to address this
need in 2011.
5. Reduce Customer Attrition

At a time when the cost of acquiring a new customer exceeds $200 and the annual income
potential from a new relationship is at least as high, banks can ill afford to accept first year
attrition rates of 30-40%. Multichannel onboarding programs that encourage alternative
channel use, enhanced services (such as online bill pay, automatic savings, privacy products,
etc.) and increased transactions need to be leveraged to stop the massive outflow of accounts
that occur early in the customer's lifecycle. Improved tracking of relationship diminishment
and win-back programs will also be used to achieve this resolution.
6. Expand Share of Wallet Through Lifestage Marketing
To compensate for the increased difficulty of generating high value relationships, there needs
to be a much greater focus on organic growth, including behavior based cross-selling and
lifestage marketing. While the movement from product centricity to being customer-centric
has been discussed for decades, the removal of product silos is no longer an option for those
banks who are seeking optimal resource allocation. More banks than ever are investing in
improved models and strategies for relationship growth which will improve both engagement
levels and retention in the long term. New service introductions such as privacy protection
and enhanced personal financial management (PFM) tools will further allow for relationship
deepening in 2011.
7. Don't Confuse Channel Economy with Channel Efficiency
No communication channel is 'free'. While email may seem like a far less costly channel to use
for reaching customers, the lack of clear targeting and message development may prove
costly as customers opt-out of future communications or simply ignore email messages. In my
experience within the banking industry, email has not proven to be as good of a replacement
for channels like direct mail as it has been a good supplement for improved results. In 2011,
banks will develop much better processes for measuring the incremental impact of alternative
channel communication and will continue to expand communication channels to include
mobile, ATMs, social media, etc.
8. Leverage Social Media Personally and Professionally
Social media channels definitely can be beneficial or a distraction. Not many of us have time
for reading about someone else's dinner plans or personal political opinions on Twitter, yet
Twitter can be a great source of timely financial industry or marketing insight and competitive
research delivered in a very compact format to the desktop for consumption at a time and
place desired. Banks have also realized that social channels need to be used differently in
financial services than with retail or other industry verticals. As opposed to trying to find
'friends' of our brands, social media has been used most effectively for customer service
(Twitter) and for the promotion of broad based public relations initiatives (Chase's very
popular Community Giving Campaign). The coming year will be a year of expanded testing of
these new channels for the banking industry. Unlike the past, however, investment in these
channels will need to generate a tangible ROI.
9. Deliver On The Mobile Banking Promise
The opportunity to be a 'first mover' in the mobile banking marketplace is quickly closing as
more and more financial organizations are introducing products that work on multiple
platforms. Bank of America has found that their market leading mobile banking customer base
has significantly less attrition than a customer without a mobile banking application. USAA
has continued to push the envelope on ways to use the mobile phone for financial
convenience including remote deposit capture, receiving auto insurance quotes, requesting
proof of insurance cards, etc. While building a concrete business case for mobile banking may
be challenging, the marketplace will eventually demand this channel for P2P payments,
geolocational applications and even low cost banking alternatives. Next year will also see the

first wave of iPad and Android tablet applications that go beyond minor adjustments to current
phone applications and leverage the enhanced capabilities of the popular tablet hardware.
10. Reconfigure The Branch Bank Model
The most challenging resolution for 2011 may be the testing and development of new branch
banking models in light of the shift in channel use by the consumer. As branches are
increasingly used primarily for account openings and small business servicing, the physical
and operational configuration of branch networks will need to be evaluated. But what will be
the best model for the future? While Citibank introduced a refined branch model late last year
similar to an Apple Store, Huntington Bank went in an opposite direction by expanding their
branch network and increasing hours and days of operation. With such a significant
investment in real estate and human resources to support branch operations, each bank will
be testing a variety of options in the next few years with multiple configurations most likely
winning based on specific market dynamics.
I am sure there are several more important resolutions that can be added to my list, but there
are already more than many of us can handle. This will definitely challenge the ability to focus
and to achieve meaningful results especially in an environment of continuous change. Similar
to personal resolutions, however, we all need to start as soon as possible and focus our
attention on those resolutions that have the greatest impact and opportunity for success.