Building customer relationships, demand conversion are top of mind with banks and credit unions in 2014

NEW YORK--Aite Group today announces the results of the third annual survey conducted by The Financial Brand, in a report on retail banks and credit unions, Bank and Credit Union Marketing Trends, 2014.

The report identifies and evaluates trends in bank and credit unions' marketing priorities, the products they will heavily market in 2014 and 2015, the channels they will market those products in, the marketing challenges they face, the tools and technologies they will use in their marketing efforts, and the metrics they will use to measure their marketing results.

2013 was a good year for the banking industry. The six largest U.S. banks earned approximately US$76 billion in profits in 2013. Smaller banks are recovering, as well. According to the Wall Street Journal, all 6,900 commercial banks in the U.S. are on pace to match or exceed the industry's all-time earnings peak of US$145.2 billion in 2006.

The profit data masks some challenges though. Despite the rebound in profits, the industry's overall return on average equity (ROE)—a key measure of the health of profits and the industry's ability to fund future growth—is still well below the levels achieved from 1993 to 2003.

Faced with the challenges of accelerating profitable growth, and finding new sources of revenue, FIs are looking to their marketing departments for solutions.

Increasing share-of-wallet (i.e., deepening customer relationships) is seen as a top 2014 marketing priority for 70% of the FIs surveyed. Loan growth was also included in the top three priorities for more than half of the FIs surveyed. After declining as a top three priority in 2013 from 2012, three priorities—acquiring new customers, strengthening the brand, and growing deposits—increased as top priorities for 2014. While increasing consumer awareness of products and services was the one priority that significantly declined in importance in 2014.

Marketers will therefore need to improve demand conversion through digital channels this year.

“Demand conversion—bridging the gap between creating consumer awareness of a product need and opening an account with a prospect—is weaker than demand generation or account creation for marketing teams,” says Ron Shevlin, senior analyst in Retail Banking at Aite Group.

“Creating and deploying activity-based marketing capabilities is therefore going to be critical for FIs to succeed in order to deepen relationships in 2014.”

In addition, as marketers simply aren't going to see significant increases in their budgets any time soon, Aite Group concludes that marketers must learn to do more with less. With the shift of focus from traditional media channels (e.g., TV, print, and radio) to digital channels (online and social media), the cost of marketing will continue to decline as investments move to these lower cost channels.