During the recession of 2008 – 2009, the financial impacts were many and were felt widely. As the current health crisis continues (and continues and continues…), individuals and businesses are feeling the pinch and their financial picture may look quite different than when 2020 began.
The needs of your customers – business and retail – are changing right now, and it’s essential for FIs to know what those needs are and proactively address them.
Historically, we have seen that when a customer has a real need or motivation, sales increase. It’s likely your mortgage data over the last several months shows this. Rates were down everywhere and customers needing financial relief from pandemic-related hardship sought to refinance loans, as a result.
When we look at the data, it shows that for many FIs, almost all new recent household growth is a result of market-driven factors driving consumer action – NOT marketing efforts.
We see something similar playing out on the business side. The Paycheck Protection Program provided much needed funding for small businesses hit hard by the health crisis and subsequent stay-home orders and restrictions. Community banks and credit unions were champions for small businesses, and their efforts were reflected in the numbers: PPP was the driver of the new business household growth – in some cases representing over 90% of business deposit and household growth year to date.
When customer needs and motivations are spurring sales, it’s beneficial to incorporate marketing activity to bring additional awareness to the solutions available and to drive greater results.
One such need that many consumers are facing (or will be facing) is the need to reduce debt. Just as people tend to get motivated to develop good financial habits and behaviors at the beginning of a new year, so are people driven to look at their behaviors in the middle of an economic downturn following a pandemic.
According to Federal Reserve, consumer debt rose to $4.2Trillion in September, matching the record high of February and wiping out all the reductions made during the early months of the pandemic as consumers tightened their collective belts. Overall debt has continued to rise over time but the pandemic and its effects on employment have created a need for customers to examine their spending habits and reduce their debt. As we’ve seen already, their motivation on its own will trigger an increase in sales. Galapagos has found that implementing marketing campaigns to support the promotion of these solutions is successful in generating additional sales.
Your customers have a very clearly identified pain point, and bringing awareness to their financial challenges and offering easy-to-understand and accessible solutions allows your FI to demonstrate not only an understanding of your customer, but a desire to protect them and their finances. In addition to providing your customers with identifiable action steps for an uncomfortable pain point, this type of marketing campaign has the added bonus of allowing community FIs to demonstrate what truly sets them apart. This could include initiatives such as: Modelling consumer debt risk and proactively reaching out with consolidation loans; developing campaigns focused on budgeting and planning where customers can sit with a banker to discover options to better budget, increase cash flow and reduce debt.
Customers are more responsive to messaging offering consultative help than to the simple product push. Working with a customer on his or her finances, establishing a budget, reviewing their financial goals with them, allows for an in-depth presentation of full-service solutions that elevate the FI to advisory status and demonstrate the personalized care that your customers want.