Travers Collins Creative BriefClient: Five Star BankJob #: 12514 Job Name: Five Star RFPDate: Nov. 12, 2012 Account Manager: Lisa Lindquist_____________________________________________________________1. Situation Analysis/Background: What product or service are we being asked to sell or promote? Five Star Bank has asked for a creative approach recommendation and suggested marketing strategies for the bank and in particular, its new consumer checking account product line. Five Star is a progressive, energized community bank with 58 branches serving Western and Central New York State. What are the trends in the market? The Move Your Money movement launched in late December 2009 urged bank customers angered by the reckless lending practices of too-big-to-fail national banks to move their money to a community bank or credit union. Since then, 55% of community banks have seen an increase in deposit accounts from new customers. Interestingly, as deposits in community banks continue to grow at double-digit rates, bank executives say it has become increasingly difficult to find profitable uses for incoming money. As many Americans are hesitant to take on new loans in the uncertain economy, competition is stiff among institutions to make what loans are possible – a key source of revenue for banks. Fewer than one in four Americans trust the financial system overall, but trust in small community banks increased from 51% to 55% in the most recent quarter of 2012. As financial institutions look at 2012 and beyond, they see a sluggish economic recovery and increased regulation slowing the pace of revenue growth and margin expansion. Faced with this outlook, retail bank executives are seeking to drive revenue generation by growing share of wallet from existing customer relationships. While customer acquisition and loan origination are still important, greater emphasis is being placed on more accurately targeting current customer segments. The goal is to identify and capitalize on opportunities for revenue growth through cross sell and up sell. Meeting this priority requires deep understanding of what customers need, want, expect and value in a financial institution. Overall, consumers are very satisfied and likely to recommend their primary financial institution. Consumer satisfaction comes in at a strong 62%, with only 4% dissatisfied and 34% neither satisfied or dissatisfied. Online banking is universally offered by community banks, and customer penetration is growing. 96% of community banks offer the ability to access statement history through online banking, and 72% do so via a mobile device. The mobile banking revolution has begun for community banks. 37% of community banks said they offer mobile banking in 2012, more than double the 15% that did in 2010. Another 44% plan to offer the service in the next 24 months, while less than 20% said they have no plans to offer it.
Is it growing, declining, new? Banks are shedding U.S. branches at a heightened pace while piling on the deposits, according to the FDIC. For the third year in a row, banks trimmed their U.S. branches. The industry cut 867 branches during the year ended June 30, 2012, bringing the total to 97,337. By comparison, branches declined about 316 in the year ended June 30, 2011, and about 1,030 in the year ended June 30, 2010. Meanwhile, U.S. deposits climbed 8.46% to $8.95 trillion in the year to June 30, 2012, outpacing the roughly 7.47% deposit growth in the prior year. Industry observers said the increase in deposits reflects continued risk aversion among depositors and investors, in the face of economic uncertainty arising from Europe and the fiscal cliff in the U.S. Community banks across the U.S. face a challenge in that loan growth has slowed, dropping an average of about 1% in the first quarter of 2012. Community banks are the primary source of lending for small businesses and farms. Even though they compose just 21% of the banking industry in terms of assets, community banks with less than $10 billion in assets made 58% of outstanding bank loans to small businesses in 2011. Larger banks offer a greater range of services than community banks can. But, by offering more personal service, community banks can attract local customers. What is the competitive situation? Nationally, large banks have the most customers, but more than a third of consumers use a community bank or credit union. Type of Primary Bank 42% Large national bank 21% Regional bank 13% Community bank 21% Credit union Five Star has two types of competitors: large competitors that are located across their footprint, and smaller competitors that exist in only a portion of their footprint. The large competitors are M&T, First Niagara and Key Bank. Regional competitors include Community Bank, Bank of Castile, Canandaigua National Bank, Eastman Savings & Loan, Olean Area FCU, Lyons National, Generations Bank, Steuben Trust and Chemung Canal Trust. In total, 23 banking institutions in the eight counties of WNY held $36.9 billion in deposits at the end of June 2012. That’s up from $31.1 billion in June 2011. Following is the market share of the top 12 banks in WNY: 38.9% M&T 2.5% Five Star 23.9% First Niagara 2.4% Community Bank 8.1% HSBC 1.8% Evans Bank 7.9% KeyBank 1.4% Bank of Castile 4.1% RBS Citizens 1.4% Northwest Savings 3.5% Bank of America 1.1% Lakeshore Savings Due to limited time, TC has chosen to select a representative sample of Five Star competitors to include in our preliminary positioning map, including First Niagara, Community Bank, Bank of Castile and Canandiagua National Bank.
What is the company’s current image and position in the market? Five Star has a 2.5% market share in Western New York. Five Star’s approach to marketing in recent years has been mainly product-based with a strong focus on building community banking relationships in the areas served by branch locations. Five Star has been fairly successful gaining attention and has increased market share in the majority of serviced markets with little to no traditional or social advertising.2. Objectives: What does the client want to happen as a result of our effort? Five Star’s Vision is to become the premier community bank in their market area, and become the “top of mind” provider in their market for banking services. Five Star’s highest priority goal is loan growth. With the recent branch acquisitions and the associated deposits, Five Star is looking to convert the acquired deposits into loans as quickly and responsibly as possible. As a secondary priority, deposit growth is always important. They plan to attain their goals by offering products and services that allow their customers to bank in the manner they find most convenient to them. So, they are looking to develop and enhance as many access channels as they can (i.e. branches, ATMs, online banking, mobile banking, etc.) They do not, however, want to overtly drive customers to one channel over another. How will we judge our success? Five Star will measure its success over the next three to five years through profitable balance sheet growth via loans and deposits. Marketing strategies should contribute in a measurable way to this overall goal. What do we want the customer to think, feel, do? We want the customer to choose to bank with Five Star and look to them first for an increasing number of financial services as their needs evolve. What issues or obstacles do we need to address? Community bank customers tend to be older and nearing retirement. Younger, tech savvy bank customers tend to choose large national banks due to the availability of technology-based services, large number of branches and ATMs and locations nationwide.3. Target Audiences: Who are we talking to? Community bank customers are concentrated in small town/rural and small metro markets while large bank customers are less than half as likely to live in small town/rural areas. Large bank customers are concentrated in mid-size/large metro areas, where growth tends to be faster, job opportunities are more plentiful and incomes higher. Another significant demographic difference between large bank and community bank customers is lifestage. On average, large bank customers are younger than community bank customers. Lifestages of large bank customers tilt toward Gen Y (20- and early 30-somethings) and, to a lesser extent, Gen X (mid-30s to late
40s) while community bank customers are older and concentrated in the Mature lifestage, which is composed of consumers who are more than 65 years old. Differences in lifestage drive a large part of financial behavior as younger lifestages are nest-building and accumulating and older lifestages are clearing out their nests and preparing for retirement, if not already retired. Community bank customers are more loyal to the financial institutions where they have their primary checking account relationships, but they are not as profitable to their institutions as the average bank customer. The affluence gap between community bank customers and the average bank customer limits community bank opportunities. What are the customers’ needs? Community bank customers are more likely to be retired, less likely to be college graduates and more likely to be married/living with a partner. Among customers who have their primary checking account relationships with large banks, they hold an average of nearly $36,000 in deposits and investments and about $31,000 in loans and credit card debt with their institutions. Community banks are able to capture about $32,200 in deposits and investments, but at about $16,300, fall well short of the amount of loans and credit card debt that large bank customers have with their institutions. Because older customers tend to hold higher deposit balances, the older community bank customer base’s deposit balances are relatively high given their earning power. But older demographics also have less need for loans. The biggest difference between large bank and community bank customers in lending behaviors is found in the category of first mortgages on the primary residence. Significantly greater amounts in first mortgages are held by large bank customers, reflective of their younger, more accumulative lifestages as well as higher real estate costs in the more urban areas where they reside. According to a KPMG survey of community bank executives, consumers age 50 to 65 and nearing retirement are the greatest growth opportunity for community banks. Community banks are bolstering their asset and wealth management capabilities as customers nearing retirement need these services. These customers are also more likely to visit the branch and meet with a banker to discuss their portfolio management and investment options. In a survey of community bank CEOs, expanding online presence dropped from 46% in 2011 to 30% in 2012 as a growth priority. CEOs may be starting to realize that the track record for growing customers via online delivery channels remains cloudy at best. Community banks have been justifying improved online investments with the need to attract younger customers, but the number of new accounts actually opened online has been disappointing. Five Star’s own research with their customers showed customers want access to more service-charge-free ATM locations, cash back on debit card transactions and enhanced online banking, specifically mobile banking. They did not want to have to choose between totally free checking and having to maintain a minimum balance to avoid a monthly fee.
4. Single Most Important Point: Based on the audience and what we want them to do, what is the SINGLE most persuasive argument for believing our story? Note: SINGLE means ONE With Five Star, your progressive neighborhood bank, you can bank the way you want. With convenient locations and the latest technology, Five Star is enhancing the customer experience by offering bank services anywhere, at any time, the way the customer chooses.5. Support Points: What is there about the product or service that will help the audience believe the single most important point? Preferably fact-based differentiators that make our product or service better that the competition’s. However, in the case of many parity products/services, this section can focus on emotion rather than fact. Five Star prides itself on providing personal, “hometown” service. The bank is committed to meeting the needs of individual depositors, businesses and the communities it services, and its employees must exhibit Core Behaviors in interactions with co-workers, customers and business partners. Extensive branch network for a neighborhood bank We believe freedom from financial worry is much more valuable than a free gift We’ve truly got your back, helping you avoid errors and oversights that result in fees We know you by name You are not a number6. Tone & Manner: What is the personality of the communication? Fun, informative, youthful, warm, celebratory, etc. Energized, fresh and modern, without losing the hometown image their community bank customers have grown to know and love. Also professional and responsible.7. Mandatories: What needs to be included? Is there a creative format that should be followed? Is there a broader marketing program that this assignment needs to family with? Nothing is off the table short of renaming the bank … they are not tied to any strategy or approach.8. Budget & Initial Timeline: When is the project due to be completed? Attach workback schedule if available. Has a budget been provided? Presentation November 30
9. Unique Value PropositionTO OUR: friends and neighbors in Western and Central New York StateWE ARE: a progressive neighborhood bankTHAT: combines the best elements of community banking with the convenience of 21st century technology
Five StarConsumer Checking Account Competitive ReviewReviewed the consumer checking account offerings at Five Star and four key competitors:First Niagara5 optionsTop 3 waive fees for maintaining minimum balanceOne waives fees without minimum balancee-checking option for $3/mo.student option freeCommunity Bank4 optionsThree have no fees or minimum balancesOne has an $8 monthly fee that cannot be waived with a minimum balanceDid not disclose ATM feesSenior optionMake claim about “totally free checking” but may be deceptive, did not feel honest & transparentBank of Castile5 optionsThree have fees waived with minimum balancesTwo have no fees, no minimum balances55+ and student optionsCanandaigua National5 optionsFour have fees waived for minimum balancesOne waives fees without minimum balancee-checking optionFive Star4 optionsThree have fees waived for minimum balances or a combination of other qualificationsOne waives fees without minimum balanceConclusionsDepending on the type of account, all banks offer accounts with free ATM transactions at their branchesand credits for ATM charges from other banks. Five Star does, however, offer more ways to get feeswaived without maintaining a minimum balance, so I think our UVP can be:
To our: friends and neighbors in Western and Central New York StateWe are: your best neighborhood option for a personal checking accountThat: offers totally free checking without a minimum balance, plus free ATMs and online and mobile options so you can bank anywhere, any time that’s convenient for you.
Bank First Niagara First Niagara First Niagara First Niagara First Community Bank Community Bank Community Bank Community Bank NiagaraAccount Pinnacle Plus Pinnacle Choice eChecking Student Completely Free 50 & Better Interest VIP Free Interest Wall Street CheckingType Checking Checking First Checking Checking Checking CheckingMonthly $25, waived $15, waived $9.95, $3.00 none none none none $8Service w/min balance w/min balance waivedChg. w/min balance, or maintain direct deposit, complete 10 POS purchase transactions per monthMinimum $5,000 or $1,000 or $300 or none none none none none $1,000Balance $50,000 $25,000 $5,000 combined combined combined deposits, loans deposits, loans deposits, (excluding (excluding loans mortgages), mortgages), (excluding credit card credit card mortgages balances & balances & and credit investments investments card balances)ATM Fees Unlimited free Unlimited free No fees at No fees at No fees at Did not disclose Did not disclose Did not disclose Did not disclose in U.S., in U.S., First Niagara First Niagara First unlimited unlimited ATMs, two ATMs Niagara reimbursement reimbursement free non-First ATMs, five of other banks’ of other banks’ Niagara free non- fees fees transactions First per month Niagara transactions per monthOpening $500 $50 $50 $25 $50 $50 $50 $50 $50DepositKey Tiered interest Tiered interest Free first Unlimited Free debit FREE Internet FREE Internet and FREE Internet and FREE Internet andFeatures rates, free rates, order of check card, and mobile mobile banking, mobile banking, mobile banking, overdraft discounts on standard writing, monthly banking, competitive competitive higher interest rates transfers, free loan and line of checks, monthly eStatement unlimited check interest, unlimited interest, unlimited with balances of cahiers checks, credit rates unlimited eStatement writing, no per check writing, no check writing, no $2,500 or more, free checks, with autopay, check check charge, per check charge, per check charge, competitive interest if free annual free checks, writing, customer customer purchases customer balances falls below financial check- free annual choice of purchases checks, ATM/Debit purchases checks, $2,500, unlimited up financial check- paper or checks, card available, free ATM/Debit card check writing, no per up electronic ATM/Debit card gift for opening available, free gift check charge, statement available, free acct. for opening acct. customer purchases gift for opening checks, ATM/Debit acct. card available, free gift for opening acct.
Bank Five Star Five Star Five Star Five Star Bank of Bank of Castile Bank of Castile Bank of Castile Bank of Castile CastileAccount Type 1 Type 2 Type 3 Basic Welcome Select Checking Priority 55 Student Checking True AdvantageType Banking Checking PlusMonthly None if write $8.00, waived $15, waived $3.00, none $5, waived $7, waived w/min none $10, waived w/minService less than 5 w/min balance w/min waived if w/min balance balance balanceChg. checks per OR receive balance OR perform less month and eStatement receive than 8 debits receive AND have eStatement per month Estatement direct deposit, AND have (50¢ for (50¢ for each OR perform at combined each debit in check written least 12 Check consumer excess of 8) in excess of 5) Card deposit transactions balances of OR perform 3 $15,000 OR bill pay have transactions combined OR write less consumer than 5 checks deposit and loan balances of $25,000 (with at least $5000 in deposits) OR perform at least 25 Check Card transactionsMinimum none $2,000 $5,000 none none $1,000 $100 none $5,000 averageBalance average ledger averge combined deposits or balance ledger $25,000 outstanding balance loan balancesATM Fees No fees at Five No fees at Five No fees at No fees at Foreign Foreign ATM Unlimited free Unlimited free Four free foreign ATM Star ATMs Star ATMs, four Five Star Five Star ATM transactions not foreign ATM foreign ATM transactions per free non-Five ATMs, ATMs transactions free transactions transactions month Star unlimited not free transactions free non-Five per month Star transactions up to $2.00Opening Did not Did not Did not Did not Did not Did not disclose Did not disclose Did not disclose Did not discloseDeposit disclose disclose disclose disclose discloseKey First order of First order of Interest First order of First order Pays interest, Interest bearing, Free Internet Free checks for life,Features 25 standard 50 standard bearing acct, 25 standard of 50 first order of 50 free checks for life, banking with bill pays preferred rates checks free, checks free, free standard checks free, checks free checks free, free free Internet pay, free True on savings and CDs, free bill pay, 10¢ cash back checks, 10¢ free bill pay, with direct Internet banking banking with bill Rewards Visa debit savings on mortgage no annual fee for every cash back for no annual deposit or with bill pay, pay, free True card application fee, for Visa Check Check Card every Check fee for Visa ACH credit, free True Rewards Visa debit discounts on home Card transaction Card Check Cars free Rewards Visa card equity and personal over 25, $10 transaction Internet debit card loans, free Internet credit toward over 25, $20 banking banking with bill pay, safe deposit credit toward with bill free True Rewards
box, up to $5 safe deposit pay, free Visa debit cardcredit toward box, up to Trueeach wire fee, $10 credit Rewardsfree bill pay, toward each Visa debitfree money wire fee, cardorders preferred CD & installment loan rates, free bill pay, free money orders
Bank Canandaigua Canandaigua Canandaigua Canandaigua Canandaigua National Bank National Bank National National National Bank Bank BankAccount Traditional Traditional Plus e-ssentials Advantage OptimumTypeMonthly No fee for 21 $6 - $8 $3 - $6 $12 $15Service and younger,Chg. 55 and older; no monthly fee w/min balanceMinimum $500 $1,000 No monthly $3,500 CombinedBalance fee with combined deposit/loan direct deposit deposit accounts of and 3 balances $20,000 electronic debitsATM Fees Free at CNB Free at CNB Free at CNB Free at CNB Free at CNB ATMs ATMs, four free ATMs, two ATMs, four ATMs, four foreign ATM free foreign free foreign free foreign transactions ATM ATM ATM per month transactions transactions transactions per month per month per monthOpening Did not Did not Did not Did not Did notDeposit disclose disclose disclose disclose discloseKey Overdraft Interest 50¢ charge Interest DedicatedFeatures protection, free bearing, per check bearing, free personal bill pay, free overdraft over 15 per checks, banker, voice & online protection, free month, overdraft preferred banking, free bill pay, free overdraft protection, rates, debit card, voice & online protection, free bill pay, Interest unlimited banking, free free bill pay, free voice & bearing, free check writing debit card, free online online checks, unlimited banking, free banking, free overdraft check writing debit card, debit card, protection, unlimited free bill pay, check writing free voice & online banking, free debit card, unlimited check writing